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Trade Details: Bought to open 5 May 26th Schlumberger Ltd (NYSE:SLB) 72.5 calls for $0.64, $327.67 total cost (99.9% of account), 9 days to go. The trade executed at 14:46:08 when the stock was approximately $71.65.
Potential: I am eyeing the $74-$75 level by early next week to capture $1+ of profit. Regardless, I will exit this trade if:
- the ask falls to $0.45 (i.e. ~70% of $0.64 -- would be a standard 20% stop if I had real-time visibility for entry and exit)
- the position is still open Tuesday afternoon (i.e. about half of the options' remaining time)
- the 2-hr MACD histogram fails to indicate divergence in a single interval from here
- the 2-hr MACD histogram reaches a relative maximum
- SLB quickly spikes into the above gap, $75.11 - $76.17
Thesis: Oil moving higher, OPEC meeting on May 25th and the dynamic political climate provide a bullish macro foundation.
The chart's technicals are lining up for a bounce (see below). The 38.2% fib retracement of the Feb to May decline looks in play. That level aligns with the above gap and a (forming) harmonic bat pattern -- all potentially pulling the stock higher. A short-term triple bottom offers support along with other bullish technical features.
SLB recently emerged in my directional analytics as one of the most positive short-term technical stories (in my small universe of stocks and relative to the SPY).
The trade entry is confirmed by MACD alignment on the 1 day / 2 hour / 30 minute chart array.
Note: I'm still operating in the dark on optionshouse -- no real-time data with an account balance under $1,000... I initially looked out to the June 72.5 monthly options, but I couldn't get a feel for price or afford to pay up for a fill. Ultimately, I took a shorter-term position and more contracts. It's shorter than I want to go right now, but the timeframe aligns well with my exit plan and thesis, and I need to take more risk at this very low capital level.