November 14, 2018

A Key Technical Trigger in Alteryx, Inc.

The U.K. and EU are reported to have reached a draft deal on Brexit. Theresa May will hold a Cabinet meeting today at 2:00 p.m. London time (9:00 a.m. ET) in a bid to persuade her closest ministers to back the “technical agreement,” which likely centers on the Irish border and temporary customs arrangement. It’s a long road ahead. Even if she gets their support, she’ll have to get the majority of parliament to back the proposal.

Let’s consider Alteryx, Inc. (Ticker: AYX):

This is a classic set up of one of my favorite technical triggers, the Inside Bar (IB).  The concept is quite simple.  This is a three bar set up.  I use this as a swing trade methodology so I am using a daily chart.  An “IB” is set up when yesterday’s high and low price is “inside” two days ago high and low price.  If that sets up you have an IB.  An IB buy is triggered when today’s price is 1% higher than yesterday’s high price.  That is your signal to get long.  Conversely, an IB sell is triggered when today’s price is 1% lower than yesterday’s low.

In the example above with AYX, the buy trigger price is $57.25.

Strategy Discussion

I am going to play this bullish trigger with options.  You can consider the AYX December 21st 50/55 put spread; selling it for $1.50.  The most you can gain is the premium collected and the most you can lose is the width of the wider spread less any premium paid.  Max risk = $3.50 and max reward = $1.50

This means that you are laying odds of 2.33:1.

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about the author:

Mike Shorr

Since 1994, Michael has been an on-the-floor market maker, Vice-President of Interest Rate Derivatives for Knight Financial Products and Director of Education and Options Instructor at Trading Advantage. He makes the oftentimes complex world of options and trading accessible to the novice and advanced trader alike. Michael has a Bachelor of Science degree in Statistics and Finance from the University of Illinois Champaign-Urbana. He presently is Director, Trader Education at ProsperTradingAcademy.

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