USO Follow Up

(*Note: I always prefer to have at least 3 times more expiration than I think I'll reasonably need. While this doesn't make for the largest profit compared to a shorter expiration more appropriate for the expected trade length, I've found the market usually goes to extreme s which include taking much longer to do something than reasonably expected and while the percentage gain is less, the win ratio is significantly higher. For me personally, going with more time and in the money options has completely changed my options trading experience from inconsistent to profitable gains and overtime I break this rule I regret it*).

I just closed the USO July 17th $20 call, here's the P/L for the position.

The gain for this 1 bounce (today) which was opened Friday after closing a USO put last Thursday at +45% (USO Follow Up) is +24%. Remember this was always meant to be a short term, speculative position, Trade Idea: USO (Speculative).

Right now the position is at a slightly better gain, but I'm not concerned with that as initially I was only going to re-enter the put position on a bounce and not even place a bounce position.

Here's why I closed it...

 On a daily USO chart you can see the head fake move from Friday, below local support with a close back above it (yellow trend line and arrow). Yesterday a Doji Star daily candle formed a bullish reversal Harami (In Japanese candlestick charting, known as "Mother with child" or in Western vernacular, "An Inside Day") which doesn't give us a target, it only tells us that the present trend is about to change, whether for a day of for a year. The gap up creates some liability as gaps have ruthlessly been filled since High Frequency trading has dominated the market.

 The 2 min USO chart is still in line and still looks decent, however...

The 1 min CL/Crude Oil (Brent) futures shows a negative divergence forming intraday. If there's one thing I don't like, it's having a gain in options and losing it by trying to squeeze more out of it and giving in to there temptations options were created to prey on, I call them the "Lotto ticket" appeal.

In any case, I have reasonable objective evidence to take those gains at this point, perhaps not all that they could be, but well worth the trade.

The next thing I'll be looking for is a new put position entry, however even with a morning gap, there should still be a reversal process which means I'm not automatically switching back to the put position, but again waiting for the objective evidence of not just probabilities, but a high probability/low risk, well timed entry.