ANET got my attention because it recently broke to all time highs. Since 9/1 it has been consolidating in a narrow range, and I’m looking for it to break out to new highs. Since these are all time highs, there will be no historical trades at these levels so there may not be a lot of resistance holding it back. The following is the daily chart for all of 2023.
Now, I might think of just buying a call right here and wait for the jump up, but on the other hand I look at this chart and see that this is a pretty “exciting” stock. Just when everything looks great it plunges to earth, then bounces back up higher than ever. So this type of stock is actually made more for a strangle than for a call. Plus, this chart just scares me to where I’m just not confident enough to rely on one direction.
I haven’t done anything yet, and I may not do anything. I’m just watching right now.
A few other observations. First, I don’t know the first thing about ANET. I know from the company name that they do something with networks, but I don’t care enough to examine this or do any more research. It really doesn’t matter. I will say that their last two earnings calls either began or concluded a bullish island reversal. May’s island is a mystery. It’s like at first everyone decided it was really bad so they gapped down and traded sideways all month, then suddenly they decide that everything’s great and they gap up and keep going up. Again, I don’t care enough to do any research on the news to see what happened, I just note the reversal. Then the one at the end of July is also a mystery. Everything is going great then suddenly from 7/26 - 7/28 they plunge 25 points they hang out down there for two days then suddenly they shoot up by 40 points the next day and they never look back. So the next move is most likely up, but again, with this stock you never know. One thing I will say is that this stock seems to weather bad news very well. They get shot down but then bounces back up pretty quickly and resumes their uptrend.
The last thing I’ll point out is that the RSI that I always use appears not to be worth very much with ATEN, with the possible exception of the downturn at the end of March.
I’m looking at Google and this lawsuit. Will the lawsuit drive Google share price down? Will the lawsuit drive tech stocks down transiently? This lawsuit could impact the indexes in a big way if GOOGL, AAPL and one or two other tech titans take a hit…doc
I’m playing on this optionsAI site:
above is bullish play on ANET and below is bear:
I’m still learning but it helps me to go thru the gyrations and look at these charts/numbers…doc
Regarding GOOGL, I don’t tend to think about fundamental factors, and a lawsuit would be fundamental. Looking at the 1 year daily, GOOGL looks pretty bullish to me, and for certain all of these lawsuit factors are already reflected in the chart. I can only surmise, though I don’t know crap , that traders do not feel that this lawsuit will result in anything negative in a big way to GOOGL.
Now, if for some reason you feel that the majority of traders are wrong and that GOOGL is about to lose this lawsuit in a big way then you could definitely play this by buying a longer-term put. Or, if you’re not completely sure what the decision will be (apparently this will be decided by one person, the judge…no jury) but feel that it will move the stock big one way or another, then perhaps you can go with a strangle. Me, I suspect that the decision will have very slight impact on the movement of the stock so I’m not sure that I would want to play a longer-term straddle which will be expensive today due to the time. You could wait until all the litigation is finished and we are just waiting for the imminent decision, but I would think that the implied volatility at that time will be high, making the options expensive. If traders felt that the decision was likely to have a huge impact, then the chart would be a lot more volatile today. The 1 year daily looks more like an orderly bull to me.
Now, I might still play GOOGL, just not in anticipation of the lawsuit decision. I would look for them to continue to break out to new 52-week highs as they’ve been doing all summer, and possibly challenge the all time high (Nov '21) which is only ~9% away. If they hit a new all time high they could have an exaggerated breakout because of the lack of meaningful resistance.
Interesting site, Doc. But I’m not sure how useful it is for my trading. The thing is that generally speaking I could care less if my options ever get in the money or if they are profitable upon expiration. I’m generally trading much shorter term than the maximum expiration.
The site wants to tell you how likely it is for you to be profitable, and how far the price needs to move in order for you to break even. But if your options expire in 3 weeks and you intend to close them in 3 days, then the calculations are very different. The fact of the matter is that if you buy a call and the stock price moves up less than 1/2 of 1% then you can close right away at a decent profit. Same with a put. You do not have to wait to surpass the “breakeven” in Options AI. If you often trade well out of the money as I often do just to save money, then you will barely ever reach the Options AI breakeven, but you can still be very profitable in your trades.
Okay, so today’s action on ANET looks horrible. Then again, look at 8/24 and the new highs afterward. For that matter, 7/26. For that matter, 6/16. For that matter, 5/2.
Always an exciting ride!