[00:02] because I was late. In our pre-market meeting that morning, one of the themes we were discussing was weakness in semiconductors. The obvious trade was SMH, the semiconductor ETF. The problem was that I didn't catch the move right
[00:15] away. Around 10:16, SMH started to break down. By the time I noticed it, it felt like the party had already happened. The move had already started and I my plan. At this point, I could have either chased the move or accepted that
[00:31] I missed it. Instead, I started cycling through other semiconductor names. What I was looking for was simple. If the sector was weak and the leaders in the sector already breaking down, is there another stock that hasn't moved yet but
[00:44] is likely to follow? And that's when I found AMD. What immediately caught my attention was the setup was cleaner. I moved down to the 2-minute chart and focused on VWAP. As AMD broke below VWAP and then failed to
[00:58] reclaim it, that became my trigger. The sector weakness had already been confirmed. Now I had a technical entry that I could define risk around. Once the setup was confirmed, I entered a bearish risk reversal.
[01:12] The structure consisted of selling a five-lot call credit spread and using spread. Now, the reason I like this structure is because it allows me to layer risk. Initially, my risk was defined by the
[01:26] chart. If AMD reclaimed VWAP and started showing strength, the trade thesis would be invalidated. But as the position started working, I the call credit spread to effectively pay for the put debit spread.
[01:41] That happened in about 15 minutes. My downside risk was dramatically reduced and the position gave me much more flexibility. On the chart side, I used a 15-minute 90 MA as my trailing guide. As long as AMD stayed below that, I wanted
[01:56] to remain in the position. On the option side, I was looking for roughly 80% to 90% of the maximum potential profit of the spread. As the day continued, AMD kept moving lower with the sector.
[02:10] Around 120, I was filled at approximately 84% of the maximum value position. For me, the biggest lesson from this trade wasn't the profit. The lesson was the process. First, I was willing to
[02:25] setup. Second, I used sector analysis instead extended. Third, I used options to continually Third, I used options to continually reduce risk as the trade developed.
[02:39] SMH gave me the idea. AMD gave me the entry, and the option structure gave me the flexibility. That's a great example of how sometimes the best trade isn't the first chart you see. It's the stock you find once you've
[02:54] done the work to understand what's happening across the entire sector.