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How We Capitalize On Option Expiration Pin Action


A daily NTLA below shows that on Tuesday, March 30, NTLA had a confluence of factors opening the door for higher prices.

1) NTLA broke out above a declining 3 point trendline, triggering what I call a Rule of 4 Breakout.

Markets oftentimes play out in threes. You don’t see many quadruple tops or bottoms. The 4th time through typically seals the deal.

2) NTLA left a large range outside up day on March 30… an LROD or Lightning Rod. Range often precedes price. So this was another positive indication of higher.

3) NTLA also eclipsed its 50 day moving average on the largest range in 10 days on March 30. This is the criteria for my Expansion Range Breakout strategy.

Taken together, these three factors left a compelling Combo setup and we used NTLA as a long swing idea for the Hit & Run Report.

As well, eclipsing the 70 strike suggested Pin Action to higher strikes was viable.

Notice the prior circled weekly option expiration days on the above chart and the tendency for NTLA to drive from strike to strike.

We filled at 73.35 out of the gate on Wednesday morning.

NTLA followed through, exploding above the 75 strike to 80.

We trimmed our position as NTLA ran up, giving an audible for members on the Hit & Run Private Twitter Feed to sell the balance of our long swing at the 85 strike last Thursday.

A 10 min NTLA below shows NTLA’s first hour high near the 85 strike region and the reversal to close near the 80 strike.

In sum, NTLA is a good example of how stocks are often pushed from one strike to another into option expirations.

One can anticipate these runs (up or down) by a combination of pattern and price action ahead of expiration.

The takeaway is that NTLA may have a date with the 90 strike this week: the inverse Head & Shoulders projects to 92.

As the Square of 9 below shows, 92 aligns with/vectors the 44 swing low — being an important 540 degrees up from 44 (360 degrees + 180 degrees).

Red is 44
Blue is 92

Consequently, I will be monitoring NTLA for the possibility of another entry and reporting it on the Hit & Run Twitter Feed.

Leverage is the tail that wags the dog, so it pays to listen to how stocks are barking ahead of Opex.

As my dad, used to tell me, “Stocks don’t move, they are moved.”

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