PCAR – Look Back Trade

Today we want to review a trade we made back in July. On 7/12/18 we noticed an Evening Star pattern in on the PCAR chart and jumped into a quick Options traded to take advantage of it.

With PCAR trading at $61.34 we purchased a 11/16 $67.50 Put expecting a move down. This option was at a 71 Delta giving us a $.71 move for every dollar in PCAR.

We set a fairly close stop and waited to see what happened. We did not have to wait long. The very next day, PCAR’s price action invalidated our pattern and we decided to close for a small loss. We sold the $67.50 Put and accepted our loss of $40.00 on this trade.

If the pattern does not work, move on to another trade. Prime example of cutting our losses quick when trading candle sticks.

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