Today opened gapped up right on the 50 SMA. I knew I was getting out today sometime before the end of the day to avoid the uncertainty of the Quarterly Earnings Report tomorrow morning 7am ET before the option market opens. When I saw gap open I thought price would just sit there all day but I waited to see if it would start running to the upside or head back down to the trend line. You can see it started heading down almost immediately.
But I got busy with other trades and when I got back to check on UPS, it had already hit bottom and was rising. I went to the 3 minute chart and was watching for it to top and start down again.
Then I noticed a Head and Shoulders pattern forming on the 3 minute chart. See the angled thick white line that represents the neckline. The white vertical lines is the measured move. I've noticed Head and Shoulder patterns on equities often reverse at half the measured move. I was worried the FOMC rate decision due 2:00pm ET today could effect my trade. So I was going to get out at half the measured move or a minute or two before 2:00pm, whichever came first. Fortunately for me, price hit the half measured move (thin white horizontal line) at 1:54pm and I sold for $3.10. Dramatically, price started back up with the very next candle, then the FOMC news came out and really pumped up the price.
So bottom line is I purchased the April 95 Puts for $2.36 on 1/22/19. Sold today for $3.10. So $74/236 = 31% gain. Not bad for 8 days. The Earnings Report tomorrow may take the stock much lower, but my personal rules say don't hold over ER unless there's a very good reason and a very small position. Getting out today was a sure thing, so it wasn't a hard decision.
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