Shoutout to my boy Kenny Glick. He's the man. And I feel like I'm channeling him a bit today. I recently saw him talking about how he's getting into a trade in a name that has failed on him so many times in the past. Yet, when there's a favorable setup, he has to step up and take another swing -- even though he's seen this movie before.
I'm going to do something similar today in a crypto miner. I've been beaten time and time again with these things. But one of these times it's got to work! Why not today?
Please forgive my tirade at the beginning of this episode about my short $MTB trade. I had to defend my honor...
But after that, me and Strazza get into the setup in MARA Holdings $MARA and how we arrived at what might seem to a lot of you (me too) a pretty high risk, but potentially huge reward trade:
For reference again, here's a one-year chart of $MARA:
Here's the Play:
I like entering a $MARA June 15/32 Risk Reversal for a small net credit. This means I'll be naked short the June 15 puts and long an equal amount of the June 32 calls. All in, I should earn a small net credit for putting the trade on today. The amount of the credit is inconsequential, but I like to get something for trades like these.
The reasoning is simple: I want the short puts to pay for the purchase of the long calls. This is a leverage play, but also a move to prevent losses if we don't get the explosive move higher we're looking for. As long as our stop loss isn't hit, then the worst case scenario is we walk away keeping the premiums we collect today, no worse for the wear.
Of course, I'll be holding naked short puts, so I need to be diligent in managing my risks. If $MARA loses the $17 level, that is my signal to exit the entire position and take a small loss while it's still small.
But as long as $17 never comes into play, I'll continue to hold this position as a free lottery ticket for the next Bitcoin bull market breakout.
[I know in the video I mentioned buying the 33 calls, but when I actually put the trade on later, the 32 calls were able to be covered by the sale of the 15 puts. Gives me just a little bit of a better shot!]
P.S. We do trades like this regularly. If you'd like to leverage Best-in-Class technical analysis into smarter directional options trades, try out All Star Options Risk Free! Or give us a call to learn more: 323-421-7910.
Sean McLaughlin | Chief Options Strategist, All Star Charts
