Hubert Senters here.
Let’s go through some basic directions for bracket trades. Bracket trades happen for one or two different reasons. Number one it’s earnings. It either gaps up or gaps down. Huge one way or another. Number two it’s news related where there’s a new FDA drug trial.
Whether it’s the CEO run off with a bunch of cash. Whether the CEO run off with the secretary.
Whether there’s male or female whichever way you want to look at. What you have is you’ll have a gap associated with the equity, the stop.
And then what we’re going to do is we want this gap to show up because now there’s a bunch of fear, greed and just pint off emotions right here in this gap. Now, some point in time that gap will be filled but we don’t know when that’s going to happen but overtime it will happen.
So in this case scenario what want to do is we’re on Tesla trade like today. Leave it alone. Now, you can’t trade this Friday because you got the 4th. And you’re not going to trade Monday because Monday is an observed holiday.
So you’re going to do this on Tuesday. What you’re going to do is you’re going to put a bracket and say if Tesla trades or closes. It’s important because you have to know your rule down path. If it either trades or closes above $1,227.57 you think it’s going to be a decent long.
If it trades or closes below of that day $1,186.80 you think that’s going to be a short and it will drop into half a gap fill or a full gap fill. That is the basics of a bracket trade.
Good luck. Hope it helps. See you on the next video.
Hubert.
