The RSI as a guide

This post is part of a series that I do where I review or lay out a trade setup using just one indicator on the 5 minutes chart – in this case RSI (Relative Strength Indicator).

Below is an example from today where I am trading GOOG (Google Inc) with the goal of a pin near 575 by selling the weekly 575 call option (h/t @BlueFielder for the specific trade idea). Now on to the chart:

The highlighted areas in RED show the key price action today where an entry and or exit can be made. In addition, the trend line drawn shows a series of higher lows in the past hour.

Again, the goal here is to have price pin to the 575 strike and keep most of the premium collected by selling the call early in the day. This specific trade execution requires diligence on managing the trade throughout the day – and should include a stop on the sold call for prudent risk management.

 

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