On August 21st, when the volatility in almost every other risk asset class the world over, finally visited U.S. equities, we wrote a post identifying levels we felt were safe near term long entries in two beloved stocks, Apple (AAPL) and Disney (DIS). Here were those initial levels:
AAPL: I’ll place my good till cancel buy order at $100.01
DIS: $90.01 is my good till cancel bid
Identifying levels is one thing, offering a way to express that view is another, from the Aug 21st post:
AAPL at $108.90, sell to open Oct 100 put at $2.80, stock above $100 you receive $2.80, stock below $100 and you are put stock at $100 on Oct expiration, but less the $2.80 in premium, or $97.20. Not a bad way to put in a good till cancel limit buy order, paid to do so.
And in DIS at $99.95, sell to open Oct $90 put at $1.50, stock above $90 you receive $1.50, stock below $90 and you are put the stock at $90 on Oct expiration, but less the $1.50 in premium, or $88.50. Again, not a bad way to put in a good till cancel limit buy order, paid to do so.
Having a GTC bid in those stocks paid off the next trading day on that gap open. It was impossible to trade options for the first 25 minutes or so (we had also suggested put spread sales as a name that trades but they would have been impossible to execute on that open) but we’ve heard from some readers that got filled on GTC stock orders on the opening print in Apple. Oh Yeaahh!:
Opening gaps like that are rare, and to get filled nearly 8 dollars lower on a GTC order isn’t a normal circumstance. But panic days do happen and sometimes they work in your favor. But we have be realistic about those lows that only lasted a few seconds with barely any stock changing hands.
So where are the new GTC bid order levels in stocks on our radar? We want to be safe enough to be down near those panic lows, but not too greedy as some of those prints were ridiculous. These are levels we will keep an eye on and they could change depending on broader market circumstances. So let’s start with Nike (NKE).
This one you can probably be patient and try to wait for a retest given the huge run over the past few years. The stock printed 94.50 last Monday, we like a 95.01 GTC bid:
[caption id="attachment_56585" align="aligncenter" width="677"]
NKE 2 yr from LiveVol Pro[/caption]
Competitor to NKE, Under Armour (UA) printed 80.12. We like that level, so GTC bid of 80.13:
[caption id="attachment_56586" align="aligncenter" width="683"]
UA 1 yr from LiveVol Pro[/caption]
AAPL printed 92.00 but let’s not be too greedy. GTC bid, 95.00:
[caption id="attachment_56587" align="aligncenter" width="677"]
AAPL 1 yr from LiveVol Pro[/caption]
And finally Starbucks. It printed 42.00 which seems insane. GTC bid, 45.00:
[caption id="attachment_56588" align="aligncenter" width="685"]
SBUX 1 yr from LiveVol Pro[/caption]
So those are our new ideal entry levels. But if we see a steady decline (non panic) we may adjust those levels and look for options trades in the names that give some room to the downside in case the entry isn’t exact, or we will look to simply define our risk with the same reasoning.