[Options] Virtu Signaling

Sean McLaughlin
July 16, 2020

Sometimes, the generous idea guys at All Star Charts just happen across something that immediately catches their eye and they post it up quick on twitter.

Today Steve Strazza offered this up on Virtu Financial $VIRT:

This is Virtu Financial $VIRT, a HFT which benefits from the wider bid/ask spreads and higher volumes that accompany periods of heightened volatility... price is attempting to break out above its YTD highs ~26 pic.twitter.com/1ZmRO29QwS

— Steven Strazza (@sstrazza) July 16, 2020

That base, and the low volatility in options immediately caught my attention too. These are my favorite setups: Blue skies up above coupled with low vol.

So I'm keeping it simple and swinging for the fences.

Here's the Play:

I'm buying $VIRT November 30 calls for $1.50 or better. 

If $VIRT closes below $24 any time during my hold, then that's my signal I'm too early and I'll look to close the trade and limit my losses (my risks are defined to the premium I pay for the calls, so no rushing for the exit here). Otherwise, if the breakout materializes, I'll do what I always do -- I'll sell half of my position at a double to remove all my original risk in the trade and then enjoy a free ride to higher prices (hopefully!) into November.

If I'm still long these calls when we get to November 1st and they are in-the-money ($VIRT is trading above our $30-strike price), then I'll hold for as long as any nearby support holds, exit when it's broken.

~ @chicagosean

We enter trades like this multiple times per week. Straight long calls, spreads, delta neutral income trades. Whatever makes most sense. Try out All Star Options Risk Free! (my favorite kind of trades!)

Filed Under: