Best Trade of the Summer

For those that followed this trade it finally reached it's target price and blew right past it. You can go back to the blog archives in July and see the Symmetrical Triangle we traded on VIP. Once it broke the apex of it's triangle we were going to patiently wait for a $13 point move. Take a look at VIP today...
I wanted to present this to you as a follow up to our discussion to triangles yesterday. Here is a completed pattern that only took 6-7 weeks to reach it's target. Not bad!!!

Jeff, now's a good time to point out why it's so important to be patient. I bought VIP right on the triangle breakout and then sold it when it 'appeared' to not be able to get through $51.00. Given that earnings were today, even if you subtract today's gains, i left $3 on the table. If i was gutsy enough to be patient and wait THROUGH earnings, i'd be sitting with an astronomical gain today. The money left on the table is far more painful than the money you lose on a losing trade for sure. All part of the learning process.


I noticed that the breakout on this triangle came on less than stellar volume on July 24. Did you buy on the breakout, or wait until a good upward push w/ volume (like the one on July 27)?

Does anyone else who trades price patterns have input on what their trading rules are for breakouts on low volume?

Breakouts (especially on the upside) should require volume of at least 1.5x average. Since half of all breakouts fail, you definitely want to put as many factors in your favor as possible and volume is a very key one. whether or not you buy without volume, keep a disciplined exit and don't buy too high, you should be able to protect yourself.

Thanks Brett. 1.5 times is a good rule of thumb...I use average volume or better as a guideline for myself. I might bring in a few more trades that fail...but as long as I cut losses short, I feel it is good enough for me. I also agree that a post on "patience" next week is a great idea. Thanks!

Looking at the july post, it said an August call. Wouldn't you have exited the trade over a week ago?

Yes, I initially chose a August option, while some took a September expiration. I also traded the resistance breakout recently, up until earnings with a Sept. option. For me there were two trades involved, while some only made one trade.

Do you usually hold options across earnings? Isn't that "against the rules". Maybe something worth discussing?

Yes, it is against the rules, and that is why I got out before earnings.

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About me

  • I'm Option Addict
  • From Saratoga Springs, Utah, United States
  • I am a professional trader and an instructor for Investools. I've had relations with the markets for 9 years. Born in Concord, CA, but reside in Saratoga Springs, Utah. Father of THREE, Husband of one.
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