We gapped up at the Open, filled in the gap and tested the 3ema. Then we reversed upward and closed over the previous Close. And we made a higher high and higher low compared to the previous trading day.
Even though we have a red candle body today, it was clearly a Bullish day. Definitely wanted to hold the position.
However, the Earnings Report (ER) is in 4 days. Our options should have increasing Implied Volatility (IV) due to the approaching event as well as the overall market dynamic activity. Option Gamma should also be increasing. These are Bullish for option pricing. But Theta time decay is also increasing, Stochastics are very overbought, and traders may want to sell ahead of the ER to capture their recent profits. These are Bearish.
So, while I seldom use Stop Losses on options, today I added a Stop Loss at break even on our position.
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