How to Trade a Run Away Market
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How to Trade a Run Away Market

John Carter 12/4/2013

How to Trade a Run Away Market

Welcome to the free video, How to trade a runaway market. We had two run away markets today in Apple and Tesla. So you can see here Apple on the daily chart, up $15.00. In this case, up 2.73 percent. And Tesla, which was, also up about $15.00, well $20.00 which is up 16 percent. Well, unless you're already long you know these are very difficult moves to be in. So what I did today was just, you know, drill down and look at the 5 minute chart, and wait for a squeeze.

Chart Frequency Not That Important

The nice thing about these set ups is it doesn't matter if this is a daily chart, weekly chart, etc. So we've got the squeeze, B wave's above zero. In this case, started buying calls and then when we break the new highs just flip it out. OK, and that's it. I mean that's the only set up you can do. You're not going to know you're not going to catch the entire move like that. But it's good. You can sit there and you can scalp that. You know, this is good for about $7,000.00 dollars today in scalps and it's pretty good money in terms of reliability. I mean it's a good set up, right.

AAPL Options Strategy

Then in Apple, if we look at a 5 minute chart in Apple, you got the same thing. Now on this one we did it a little different. We had the squeeze -- on the other one where I bought calls, on this one I just wanted to sell them at the money put spread and just did it with smaller size. This is one that we did in the room and held it overnight looking for additional Theta decay. And so on this one we just sold the 555 puts-- or sold the 565 puts, bought the 555s as protection, and then just held that in the close, to see if we can get some Theta decay tomorrow. And if it keeps going higher we'll just let it expire. But you know if it looks a little shaky tomorrow we'll take that Theta decay and take the money and run. OK.

So when you see a runaway stock like that and you're trading options you want to have a plan. You don't want to just chase it, and that's the plan, OK. I hope it helps. You guys have a good night and we'll see you at the next update.