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Trade Idea: RADI Straddle

Hey Fam, just wanted share an options trade I placed today in case anyone's interested. This is one I've been eyeballing for a while and finally got the signal I've been looking for to take it. As I mentioned, I want to use this more intimate setting to share trade ideas that I'm no longer comfortable sharing on Twitter. I used to share stock trades all the time but it started making me feel weird that so many people started piggy-backing my trades without doing any of the Due Diligence (never a good idea). Ok, so what was I looking at? A RADI Straddle.

You're probably asking, "Horse are you really interested in cell tower rentals?" No lol. This is purely a technical trade, trying to capitalize on an upcoming catalyst. Here's my thesis:

  1. RADI has been consolidating for almost a month, and the trading volatility has decreased dramatically (as seen by the Bollinger Bands).

  2. The consolidation has taken place around the largest High Volume Node on the chart, creating a hefty Point of Control (POC).

  3. As you can see from the chart, this new ticker usually trades somewhat volatile, so we can lean into that fact for this trade thesis.

  4. The catalyst here is a mix of upcoming earnings, recent upgrades and an pick-up in institutional buying recently.

  5. So in summary, I think this thing is going to move; however, the price action conflicts with the upgrades/institutional buying, so I don't know which way it will move.

Hence the straddle.

So what did I mean by "price action conflicting with the upgrades/buying"? I'm referring to where the stock is sitting from a technical perspective. This is essentially a "breakout trade" (my favorite), but based on the deltas of the straddle position (I'm slightly skewed to the downside), I'm basically playing for a breakout to the downside. That's what makes this trade interesting to me: Yes it's a straddle, yes the stock is being upgraded, yes 'tutes are buying...BUT, the market loves to f*ck people and big buyers like better prices. So I'm technically positioned for this thing to break either way, but favoring the downside here.

I went with the DEC17 17.5 Straddle, but I noticed most were playing the NOV19 17.5 Straddle. Even though the liquidity is worse for me, I absolute hate short-duration options. This one is already pressing the limits for me. At the time of purchase I was about to get them at ~30% IV, which has been slowly growing throughout the day today. Now, "back in my day" 30% was a lot (i.e. this is an expensive play), but given historical volatility on this stock I think <$16 or >$19 is a very likely scenario after this thing moves. Primary Risk for this Trade: Liquidity

Secondary Risk for the Trade: The piece of shit doesn't move Very low volume on the Dec Options Chain, and it took me a while to get the fill I wanted on both sides. I normally avoid these trades like the plague, but I noticed I wasn't the only one positioning this way so I was able to have enough liquidity to get the position on (let's hope I can get it off if I'm right lol).

Exit Plan: Ideally would like to close this very near earnings to avoid the implied volatility crush, but it's a small position so I might let it right if we truly breakout to the downside. We're getting some decent volume (relative to normal) and already -1.28% down on the to see it. The trigger for me was the volume at market open today. Hope you enjoyed this, thanks for being here. Cheers,


2 comentários

Thanks for this Horse! Love this forum and your content! Is that $9.30 level/line your ultimate downside target? I'm guessing any upside targets will require some range extension techniques which would be great to learn more about if/when you get time to cover it. Thanks again, appreciate all your efforts!

14 de nov. de 2021
Respondendo a

No that is the Point of Control (POC) which appears to be derived from a volume error in TradingView from the IPO? I should have removed the POC line, apologies!

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