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Why This Trade Looks Like a Good Risk-Versus-Reward Setup

by | Mar 14, 2024

The week is winding to a close along with the best earnings action, but that hasn’t slowed the unusual options activity from peppering the News Flow Scanner. 

And one order in particular piqued my interest today because of something we talk about a lot around here: risk management and respecting the risk of each trade.

This is crucial so we don’t blow up our trading accounts with a couple of bad trades — which happen to EVERYONE at some point. 

So let’s discuss bottom fishing today… 

Rivian (RIVN) was having a big week. In fact, from March 7 to Monday, it was up about 20% on news of its new R2 SUV, which starts around $45K. 

But it’s been downhill since…

After topping out over $13 a share on Monday, it’s down about 8.5% this afternoon to around $10.50. 

And while the stock’s been sinking the past couple of days, some bulls have done some bottom fishing. Check out these orders…

And you know what? I don’t mind a little bottom fishing because the stock is down multiple days in a row, and these calls have dropped a pretty penny since Monday.

Let’s look at the March 22 expiration, $10.50 strike calls. 

When the stock was ripping on Monday, this option peaked around $3.16 a contract. 

As of 1:20 p.m. ET today, it’s about 60 cents. 

With the stock down so much over the past few days, that’s a solid risk-versus-reward setup because it’s bound to catch a bid higher at some point. 

Nothing’s guaranteed — EVER — in the stock market (look up the term “falling knife”), but when it comes to bang for your buck, you can do a lot worse!

We also saw an Adobe (ADBE) earnings bet with the company reporting after the close. Puts are often hedges against long stock positions, but these were in the money when bought — though, they are SUPER pricey. 

And we saw a long bet on U.S. Steel (X) that could be someone hoping the company’s merger goes through before this April monthly call expires. 

As always…


Thursday’s Top Order Flow: 

  • ADBE Apr24 5th Strike: 575 Puts premium: $278,500 ASK BEARISH
    Trade Date: March 14, 2024 Trade Time: 12:00 pm
  • X Apr24 Strike: 40 Calls premium: $234,000 ASK BULLISH
    Trade Date: March 14, 2024 Trade Time: 11:55 am
  • RIVN Mar24 22nd Strike: 10.5 Calls premium: $113,400 ASK BULLISH
    Trade Date: March 14, 2024 Trade Time: 10:32 am

Note: If no date is listed after the month, it’s the monthly expiration (third Friday). 

Lance Ippolito Trading Team

Lance doesn’t want the CCP spying on him, so you’ll never find him on TikTok. Same goes for other social media sites, which are filled with impersonators, scammers and crypto bros. 

You can only find him on his personal YouTube Channel — smash that Subscribe button! https://www.youtube.com/@LanceIppolito 

And in his private Telegram channel: https://t.me/+-gVwEIwGJhplMTgx 

*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk. 

P.S. There’s Nothing I Love More Than a MASSIVE Overnight Mover

Did you catch our BIG win in Oracle (ORCL) this week? 

I saw over $1.1M worth of calls piling in ahead of earnings Monday thanks to my “Overnight Options” scanner… 

So I jumped in! And good thing I did… 


Because we went on to nail one of our best trades of the year!* 

This is EXACTLY what my “Overnight Options” scanner was made for! 

Now of course not every trade is this big.. We’ve had plenty of small and medium winners, and there will be losers, which is all part of trading. 

Check out my presentation to see what you need to look for to start using this powerful tool to help with your trading.  

Just Go Here!

*Past performance is not indicative of any future results. Trade at your own risk. From 2/21/20 – 3/13/24 on live trades the win rate is 70.96%, the average return is 12.37% on the options over a 5 day average hold time.

WRITTEN BY<br>Lance Ippolito

Lance Ippolito

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