(1) The opening range (first 30 minutes of the trading day) is frequently a time of price exploration where buyer’s and seller’s often set at least the high or low for the day. Sometimes the entire day’s range is set during the opening range. This morning’s price action in INTC saw price rise to within $.01 of last month’s HB (the mid-point of last month’s price range) and fall to within $.01 of yesterday’s high. The prior period’s (day, week, month or year) high, low and HB price levels are important areas where algo’s often have resting orders. Those important price levels are good areas to initiate or Delta Hedge positions.
(2) See today’s price action in C below.
(3) The area listed as “important support” on the GLD chart below contains yesterday’s, last week’s and last month’s HB! That’s not something you see everyday. With the prior day’s candle being a very large bullish candle if price is able to remain above the HB zone (50-61.8% retracement) of that day’s range it’s a relatively bullish outcome. Even though the hourly chart would look more bullish had price found support at the rising lower band the price action on the daily chart will cause me to hold a bullish position overnight tonight. It’s important to understand that the price levels of very large candles are often as important as a prior day, week or month’s. Actually, sometimes they are even more important! They are like their own time period and they deserve respect when you’re looking at a chart! What makes a large candle so important? They form due to unusually strong supply or demand. If the price action in the period following the large candle doesn’t reverse at least half of the move it’s likely price will continue in the direction of the large candle.
(4) I bought NFLX Vertical Call spreads on Friday. Right now, with price up over 1% this morning, I could make this Delta Hedge (DH) adjustment (below).
Or what about this DH? Leave more risk in the trade now and widen the potential maximum profit zone at expiry? I can always narrow this Condor later if NFLX continues to rally to take more of the initial cost out of the position and likely get to zero cost or better.
I think you can see why I’m considering taking my risk down on $NFLX as price approaches 575.
