2/6/2019 – $NEM


Stock Overview: Newmont Mining has been grinding higher with the overall strength in the spot gold price.

Market Overview: The market has made a huge run into last nights SOTU speech. The first hour of trading suggests a flat neutral day is likely.

Technicals: The stock opened up red and immediately and got bought up to flat. NEM has been trading inside of a 5 day range of 34.20 to 33.70.

Trade: The trade was buying puts when the stock traded back to the gap down area (34.07). I was willing to risk .31 cents given the prior 5 trading days saw resistance at 34.20. Also of note, spot gold was down on the open. Gold stocks loosely track the price of gold.

Summary: The entry was pretty early given the stock ran 24 cents higher against me almost immediately hitting 34.31 within 15 minutes. The stock hit resistance in the 34.20s and dropped back down just before getting to my stop. There really wasn’t a reason to short the stock below 34.20 given it has hit that level the past 5 days in a row.

I had a choice to make at that point…stick with the original plan OR realize my entry was pretty poor and take a small loss. I decided to cut the trade when the stock backtested VWAP at 34.12 – of course later on the stock flushed well below $34 and would have netted me a decent profit.

I learned there was no reason to short before the top of the range has been hit. Maybe a little FOMO took over on the entry, given that spot gold price was red. If a stock hits a certain level 5 days in a row, odds are good it will do it a 6th day in a row. Had I respected the daily/weekly range I would have entered the trade at 34.25 risking 25 cents. This would have given me a better risk/reward ratio.


Result: -.06 contract (LOSS)


Trade Plan

Entry: $34.07
Target: $33.69

Actual Exit: $34.12

Risking .31 to make .38

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