Taking Advantage Of The Pullback In Crypto To Bet On A Couple Of Picks & Shovels Plays

Waiting For The Right Setup 

In our Exits post over the weekend, I wrote about using Chartmill’s Setup Rating, a measure of technical consolidation, to time entries into post-earnings trades;

In the past, I’ve placed post-earnings trades in situations like this, where a stock is down despite solid earnings (also in some cases where there was an earnings miss but I was still bullish on the stock. One difference I’m doing now is waiting for some price consolidation before placing post-earnings trades. Specifically, I set an alert on Chartmill for when the Setup Rating on the stock hits 7 (out of 10), while the overall Technical Rating is at least a 6. That increases the chance we’re not catching a falling knife. Then we can jump in and place a longer-term bullish trade. I plan to do that with COIN, as I am still bullish on it.

Today, Coinbase Global, Inc. COIN has a set-up rating of 7, so I placed a bullish bet on it expiring after its next earnings release. Although Coinbase crushed earnings last week, the stock didn't spike as a result, likely because of the recent pullback in Bitcoin BTC/USD.

Looking For An Upside Target

To figure out what kind of upside to aim for, I looked at the expected move for COIN going out to September 20th (the first options expiration date after it releases earnings again in August). I had ChatGPT run the numbers for me based on my inputs:

A move of nearly 38% seems possible by then, but I decided to aim for one of about 20% instead, to be less aggressive. Our trade will give us a maximum gain of about 200% if that happen

Our second trade today is on a company releasing earnings this week. It’s flat on a negative headline this week, but I am still bullish on it. I currently hold its underlying shares as part of our core strategy, and I also have a bullish options trade on it from last month. You can read about that one here

If you want to stay in touch.

You can scan for optimal hedges for individual securities, find our current top ten names, and create hedged portfolios on our website. You can also follow Portfolio Armor on X here, or become a free subscriber to our trading Substack using the link below (we're using that for our occasional emails now).

This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Date
ticker
name
Actual EPS
EPS Surprise
Actual Rev
Rev Surprise
Posted In: EarningsTrading IdeasGeneralcontributorsExpert Ideas
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!