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'Sweet' Trade, Two Exits

July 20, 2021 10:24 am
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'Sweet' Trade, Two Exits

Hey 5-Star Trader,

“Tuesday Trade” Journal: One of the most important concepts in trading is to review your work, and learn from the good and the bad. Identifying what is working is critical — to do more of it. So, to lead by example, each Tuesday, you’ll get a trade from my trading journal, in which I explain my thought process from start to finish. Trading is all about finding something that works and applying it over and over again. That’s how you find trading success. So study up on this “Tuesday Trade” and let’s get to work.

Today I want to outline my trade-in Hershey (NYSE:HSY).

Like most traders, I have a list of “favorite” tickers I love to trade. Many of you know Chewy (NYSE:CHWY) is one of my all-time favorites! And while my list of “go-to” tickers continues to grow, HSY is not one I dabble with often. However, while searching through the market on July 6 I saw the HSY daily squeeze and knew I had to buy. 

I decided to buy five butterflies with a target of $180 ㅡ BUY +5 BUTTERFLY HSY 100 16 JUL 21 175/180/185 CALL @1.13 limit order (LMT).

This was a low-cost butterfly that allowed me to buy multiple contracts, but it was bullish in nature and I risked the full $500  amount.

Pictured below is my butterfly options chain:

One week after opening the trade, HSY was still looking good. Playing on the cautionary side, I decided to sell three out of my five butterflies ㅡ SELL -3 BUTTERFLY HSY 100 16 JUL 21 175/180/185 CALL @1.02 LMT.

I did this because even though I was still in the green, I didn’t want to lose too much value in the last few days prior to expiration. By selling those contracts I was able to remain in the trade for more potential upside movement while mitigating my risk and cashing in some profit.
The very next day I got out of HSY taking a double on my remaining two contracts ㅡ SELL -2 BUTTERFLY HSY 100 16 JUL 21 175/180/185 CALL @2.62 LMT. 

Interested in trades like these? Join Danielle’s Stacked Profits Mastery program. There she gives you real-time alerts for the entry and exits she is taking.

Image Sourced from Pixabay

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