“I’d also underline waiting on the “sell signals” all firing,”… Agreed 100% as that is critical when trading options. I often say there is a difference between being early & wrong when trading stocks: I am “early” if I go long or short a stock that takes much longer than I expected to hit my price target as long as I am not stopped out first. However, I am “wrong” if my stop is hit, even if the stock goes on from there to play out as expected & hit my price target.

However, when trading options, being too early is usually the same as being wrong even if the underlying stock doesn’t move against the direction of your trade but also doesn’t move IN the direction of your trade or at least not fast enough. As such, with options, you not only have to get the call on where the underlying is headed but also when it will get there within a fairly accurate window.

Yes, I have traded LABU, LABD & XBI (the latter of which the former 2 track) extensively for years, with a good part (but not all) of that analysis & previous trade ideas here (many of the posts from the first link, XBI analysis, will overlap with the 2nd two links, which are LABD & LABU home page posts).

https://rightsideofthechart.com/tag/xbi/

https://rightsideofthechart.com/tag/labu/

https://rightsideofthechart.com/tag/labd/

Here’s the post from Feb 2016 when I closed out a short trade on LABU for an 85% gain, which was used as a proxy to short the biotechs after I called for a bear market (“Biotech Wreck Pending”) in the sector back in July 2015, literally just a few days before the biotech sector peaked followed by a vicious 50% bear market:

https://rightsideofthechart.com/biotech-wreck-pending-video/

https://rightsideofthechart.com/closing-labu-short-trade-for-85-gain/

I opted to short LABU instead of buying LABD (or shorting XBI) to profit from both the drop in the biotechs as well as benefit from the decay suffered by 3x leveraged ETFs over time, especially LABD & LABU (two of the worst offenders when it comes to decay).

Yep, It’s all about the R/R (risk vs. reward). The primary trend in the stock market remains bullish but the R/R on swing, trend or position trading on the long-side seems quite unfavorable to me, yet there aren’t any decent sell signals in place to make a solid case for a swing short right now either. Maybe soon, maybe later but until then, better fish to fry elsewhere especially with stocks & sectors that aren’t heavily weighted in the major stock indexes.

Still awaiting a decent buy signal in the pot stocks but if & when that comes AND the sector (i.e.- the majority of the pot stocks) start rallying in unison, there should be a nice momentum trade there that could provide some quick & fairly large gains as a little as 5% upside in MJ has the potential to spark a short-covering rally which will then draw in the momo-traders.

@Frankie3, welcome! As primarily options trading myself, I’d also underline waiting on the “sell signals” all firing, when considering entries as Randy puts it…or, else, just be prepared to go out as far in expire as you can, and even then take partial positions stepping in, since hardly ever is an entry to a trade 100% perfect. I’ve waded in and dollar cost averaged, into many of the almost “official” trades, before signals, and usually do better than 20% to 40% (but usually do better than 100%+ on official trades); yes I’ve cut losses on some, but only because I entered too early, (not including a mere 2 losers) but successful on over 90% of ones I selected and felt great about // that have the volume conducive and greeks most favorable to options trading. Hope that encourages you! Good luck!