jay_beckner

I play poker and trade options, seeking edges from study, reflection and analytics.

#018 TWLO Calls

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Trade Details: Bought to open 3 Jan 21st Twilio Ord Shs Class A (NYSE:TWLO) 30 calls for $2.50, $756.57 total cost (99.3% of account), 39 days to go. The trade executed at 10:13:21 when the stock was approximately $30.25.

Potential: Unlimited, but I'm targeting the 0.618 Fibonacci retracement level at $34.85 to exit the trade prior to expiration (for about $5.50 of option premium). I will look to cut losses if the price moves bearishly through the yellow uptrend line in the chart below.

TWLO 30-minute chart showing downtrend and Fibonacci retracement levels.

TWLO 30-minute chart showing downtrend and Fibonacci retracement levels.

Thesis: The MACD line remains above the signal line on the daily chart, it recently crossed bullishly on the 30-minute chart and is crossing on the 2-hour chart. Volume is increasing. Alongside other bullish traders, I went out to January for call options (vs using nearer-term contracts) to resist the volatility as the stock attempts to break trend. At the time of this writing, TWLO tested the downtrend line and pulled back to the mid 29's - it's very possible that I'm making the mistake of being early again.

The megaphone formation in the XLK gives me pause. SPY is bullish but stretched.

The megaphone formation in the XLK gives me pause. SPY is bullish but stretched.

I am experiencing buyer's remorse as I think through this trade write-up and watch the stock test support. The market has been melting up, making all-time highs, but TWLO has been selling off. The IPO lockup date is approaching (Dec 20th), and there may be some tax selling as the stock has pulled back almost 60% from its highs. The above chart may be waving a red flag in the tech sector while others like financials and energy perform. I think I'm going to need some luck on this one.

Note: This morning, I received a notification from optionshouse that my real-time quotes had been turned off due to my (< $1,000) account balance. I have no idea if the fill on this trade was good since I couldn't see the market when adjusting the order's limit price. I could add money but don't want to for the sake of my challenge/goal and the fact that I have a lot of improving to do... The optionshouse trading application also wouldn't let me add extra windows to create the 30-min/2-hour/daily chart array that I've been using to time entries/exits.

#018 TWLO Calls Expired

#017 AMZN Calls Day Loss