A 5 to 1 Set up Opportunity

A wedge breakout - textbook set up like what I post on X or TikTok / YouTube / Instagram / Facebook - from my books or a re post - identified in real time - with real money - a 5 to 1 set up: 

The way to read this is to look at the underlying technical indicators - I posted yesterday from my book about the pattern rounding out on the bottom - when it is ready to reverse. Here you can see it does that well and breaks out of a wedge formation. This is viewing the technical indicators that you would use on a price chart - on the option itself directly. This is useful once you've already identified a position that will likely move. The option then pays you for - how soon it moves after you get in - and how much it moves - that is key with options. You don't get paid more for a later move - you get paid for unanticipated large moves that are not priced in to the option. 

You can see the entry for this pattern occured around 10:30 eastern time - while the option price made a higher low - the price itself made a similar low or lower low - this tells you the anticipated direction of the move is up - something the option can tell you and the price chart itself cannot - 

The first move or entry at the low is near $2.55 - this would get you to $5 on the first resistance - and second entry at $3 up to a final read of $9 - a total of 2:1 on move one and 3:1 on move two - before topping out near the upper resistance level - a predetermined time to sell. I like to follow the CAN SLIM rules and methodologies and sell into strength - or a climax top. Or in other words - I combine rules from multiple strategies, places, strategists, professional traders / mentors / authors / gurus / live talks - and combine it into one unique 'Lutey' system - developed to trade and bring it to everyday awareness of every day people. 

Since there is a variety of reasons someone places a trade - efficient market theory does not account for the Lawyer placing a trade in the morning on a tip - or the Doctor or Dentist placing a trade before their office visits - surgery or patient visit - or naive 21 year old college student giving it a try. These market participants make it possible for professional investors and traders to step in and profit from the short-term micro inefficiencies created (arbitrage opportunities) identified by the technicals and pattern - with managed risk using options.