Strategy Description: The news and size of the gap is somewhat relevant on this play. In this case it was a pretty decent gap (about 7%) on the news of a spinoff.
On a trade like this if you're looking for the short, you either want to short a pop to resistance (say the premarket high), or look for it to find new resistance as it did in this case at $75. I think this trade on the open against $75, but what I really want to hone in on is later on, when the trade starting working again after I had taken the stop of the remaining half of position.
You can see from the intraday chart that mid morning it is beginning to attempt to stage and uptrend but is repetitively failing at $74.80 which was a level from the premarket.
Two options for execution of the trade. Initiate a position near $74.80 with stop over $75 in anticipation of it failing trend. If you were quite biased on direction may do this, and then add as it fails trend and stop-loss can be trailing.
Or initiate some of a position as it fails trend, and then go full position size once it begins finding some resistance and stop-loss can be trailed to the trend break zone.
Then same strategy for both covering options. Cover portions on way down and hold some until trend breaks.
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