Check Out These Day Trades
It’s earnings season, which is a time to be very careful. With my normal Swing Trading I try to stay away from stock with news coming out. However, with my new Day Trading it’s a time to lick your chops.
This morning, before the opening, I was looking for stocks that gapped up or down because of their earnings report. I came across a stock I never traded before. The stock is Ares Pharmaceutical (AVIR). Yesterday the stock closed at $40.60 and today the stock was down $29 in the pre-market. It was down to the $11 area. This is a huge gap down!
I knew nothing about the stock so I looked into it. The first thing I noticed is the stock has a B rating. This means it’s a pretty good stock. I also noticed that the gap down was not as a result of earnings, it was a result of a bad report on a COVID drug they are working on. I looked up the Short interest and it was at 7.8%, which is pretty high. The reason I was interested in the Short interest was the gap down. I felt a lot of Short players would cover their Short because of the huge drop to take profit. And if the Short players started buying the stock to cover their Short position it would help the stock to bounce back up.
At the open I watched the first few candlesticks to see where the stock might go. It pulled back a little more but then started to move up. At about 9:40 I bought 1000 shares at $11.50. As the stock moved up I set a Stop Loss at my buy-in price of $11.50. The stock hit $12.50 and I moved my Stop Loss to $12. When the stock hit $13 I moved my Stop to $12.50. As the stock moved up I moved my Stop Loss up. With the stock at $14.50 it leveled off. I had my Stop set at $14. The stock came down to $14 and I was stopped out being in the trade for only 45 minutes. This was a $2500 gain.
AEHR Day Trade
10/19/21 – Buy 1000 Shares AVIR @ $11.50
10/19/21 – Sell 1000 Shares AVIR @ $14.00
Profit +$2500
I continued watching the stock and jumped back in with another 1000 shares at $14.30. I used the same process of moving my Stop Loss up as the stock moved up and I was stopped out again at $15.50. I was in this second trade for about 30 minutes and this profit was $2200.
AEHR 2nd Day Trade
10/19/21 – Buy 1000 Shares AVIR @ $14.30
10/19/21 – Sell 1000 Shares AVIR @ $15.50
Profit +$2200
What a fantastic start to my day. I made 2 Day Trades for a total gain of $4700 before 11am.
This is the possibility with gapping stocks.
Another trade I want to report is with Nvidia (NVDA). I’m still holding 4 contracts of the 120/23 $205 Calls as a result of the stock doing a 4:1 split earlier this summer. The stock was up yesterday so I sold 2 of the 4 contracts.
Let’s take a look at the position I own. On 7/7/21 with the stock at $818 I bought 1 contract of the position below.
7/7/21 – Buy to Open 1 NVDA 1/20/23 $820.00 C @ $164.00 ($41.00 post split)
When the stock split this became a 4 contract Call. It turned into the position below.
Buy to Open 4 1/20/23 $205.00 C @ $41.00
I went from 1 contract to 4 contracts. The Strike Price went from $820 to $205. The premium went from $164 to $41.
Yesterday I decided to sell 2 of the 4 contracts for a $1000 profit.
10/18/21 – Sell to Close 2 NVDA 1/20/23 $205.00 C @ $46.00
Profit +$1000
I still own 2 contracts. As I write the stock is up $4. I might sell or I might hold these 2 contracts. They don’t expire until 2023. These are the last 2 contracts I’m holding from the NVDA split.
The split strategy worked very nicely. Since July I already locked in $19,800 in profit and I still own 2 more contracts. I’m very happy!
I’ll be watching AEHR very closely. I believe this stock will be moving higher.
Successful trading,
Steve
The Options Coach