trading parabolic moves

[Yodean]

This will be a bit of a funny question: anybody have any advice about how to trade parabolic moves, in both directions? I've been on both sides of those trades, many times. Not sure if I learned much from those moves, that consistently hold true (trying to go beyond homilies like, "take profits," "don't catch a falling dagger," "respect your stops," "be patient and disciplined with your position sizes" etc.).

For example, I was lucky enough to accumulate, over time, a large position in GBTC with a cost base of of under $12. GBTC has kinda gone parabolic.

What to do? I have my own thoughts on the matter, but would like to know what others think.

[MarkD]

These always correct quickly. I noted the same thing in February, sat in cash for several days/weeks, and was pretty well positioned by the time the bottom was in, late March. Bottoms are pretty quick so I use sentiment and breadth ($NYSI/$NYHL/$CPC) to buy in chunks. Similar to Sol's methods.

[SOL]

This will be a bit of a funny question: anybody have any advice about how to trade parabolic moves, in both directions? I've been on both sides of those trades, many times. Not sure if I learned much from those moves, that consistently hold true (trying to go beyond homilies like, "take profits," "don't catch a falling dagger," "respect your stops," "be patient and disciplined with your position sizes" etc.).

For example, I was lucky enough to accumulate, over time, a large position in GBTC with a cost base of of under $12. GBTC has kinda gone parabolic.

What to do? I have my own thoughts on the matter, but would like to know what others think.

If you are willing to take on some risk. You can open a strangle option play, This entails buying a put and a call with different strike prices. Optimally this is done with options that have at least 6 months of time premium. The idea is to look for a large move in either direction since you have a long and a short position at the same.

However, this only works if the move is large if the stock or market trades within a tight range then you loose money on both ends.

[AstuteShift]

This will be a bit of a funny question: anybody have any advice about how to trade parabolic moves, in both directions? I've been on both sides of those trades, many times. Not sure if I learned much from those moves, that consistently hold true (trying to go beyond homilies like, "take profits," "don't catch a falling dagger," "respect your stops," "be patient and disciplined with your position sizes" etc.).

For example, I was lucky enough to accumulate, over time, a large position in GBTC with a cost base of of under $12. GBTC has kinda gone parabolic.

What to do? I have my own thoughts on the matter, but would like to know what others think.

If you are willing to take on some risk. You can open a strangle option play, This entails buying a put and a call with different strike prices. Optimally this is done with options that have at least 6 months of time premium. The idea is to look for a large move in either direction since you have a long and a short position at the same.

However, this only works if the move is large if the stock or market trades within a tight range then you loose money on both ends.

You can also do the buy strangle and straddle option strategies with earnings as well

The strategy can be done safely however it requires one to put in time and also be very advanced with options and knowing how the Greeks work (gamma, Vega etc)

It involves buying the put and calls before earnings where historically the relative value is low, and you sell them prior to earnings to capture the gamma gains

This strategy I’ve done before joining TI, it’s a nondirectional plays and you don’t care at all where the market is since you just trying to capture the gamma gain and get out before earnings happen at a particular stock

The only downside to doing this now is, the VIX is extremely high and option premium is expensive which does expose you to more risk since these are short term plays. Also there is a risk the stock does not move at all, however it does offer you protection from market moves. Every strategy involving options is not 100 percent safe unfortunately

However, if the market crashes or goes parabolic then you capture those sweet gamma gains and protect yourself. This is more for the advanced option trader who is willing to put in the research to find which stocks have the cheapest relative value of the straddle or strangle, which ones have historically have the big gamma moves and of course getting out before earnings since you don’t want to risk being in the binary event.

Several sites such as market chameleon can do the leg work historically and help you pick the stocks which have the highest amount of success

I still do them from time to time, however this for the active trader.