Video: Free Pattern Recognition Trade
This daily chart of QQQ has a perfect set-up for a third leg down in this nascent bear market. It can start as early as Monday, or has late as it it damn well wants to, which presents a problem for buying the best suited strike and expiration to maximize returns. With this post I hope to solve that dilemma by choosing a 10X return - based on a conservative assumption of Wave 3 only being equal to Wave 1, while history suggests it will be at least 1.5X the decline as Wave 1. If so, those 10X returns will be more like 15X returns, which would be more in line with prior Wave 3 wins.
With QQQ at or below 220 by October 21, 2022, this put will be valued at $80.00 or better. In a panic (read: multiple trading halts), I expect QQQ to be break below 180, pricing this put at least at $120. Note that breakeven on this trade is QQQ 292, a price that was seen just 2-3 weeks ago in mid-July. That's not much of a bar to achieve. Throw in a 50% stop ($400) and this risk:reward profile is insanely attractive.