USO: JAN 9 bull put spread 18.50/18.00

This was another bad trade. I forced this trade through bisecting too far on the daily chart. The support below the initial support line of entry is 18.55. My strategy is to sell strikes below the second support line. This would've been an 18.00/17.50 or a 17.50/17.00 bull put spread 1 or 2 weeks in adv. I think with such volatility in the stock (should look at vix levels also, currently at 20.), 1 week trades would be safer I believe.

What I did, was sold an IC at 17.50/17.00 and 19.50/20 to offset the loss. Not sure if this will work,

lessons learned

1) only use IV ranges for 15d, 30d, 52w
2) for high vol stocks (i.e 40% or higher ) pick spreads below secondary support line that are 1 week to expiration or as close to 7 days as possible.
3) Credit received could have been higher. However, with spreads like these a 5% gain is respectable.
4) Only bisect further, if you intend on taking a long stock position without commitment.This way you can establish a stop loss if it does not go your way.
5) Daily chart and Weekly for trades 1 week/2 weeks beyond. 1/5 min chart is for day trading.

For the future:



The yellow line is a calculated IV range point. This looks to be the next support line. So a 16.00/15.50 bull put spread would be a good candidate if you can get a decent credit. This is also following the strategy of selling premium beyond the second support level.

Consistency is key.