On Friday I identified a suitable entry for the HOG Rider, just as the previous trade closed. Last night, I got the bullish credit spread filled at 75c per contract, using strikes set $2.50 apart. So all up (staying under the $1,000 limit), I got five contracts filled for a $375 reward with a $875 risk over 31 days.
This high potential return comes about due to the high risk in this particular trade as it has a lengthy term and is set reasonably close to the price.
Well the Sep 16 expiry was met with the HOG still on track making maximum potential profit. After the late start waiting for the signal, I only had a short run to expiry and HOG did not move in the right direction, however the trade closed for maximum profit at expiry for 9% profit after brokerage (about 11 days).
And the setup is there to enter another HOG ride on Monday. Since the price action is close to the 63 EMA and there is a full month to expiry, I expect to get a high value trade placed.
I had to make a decision about the HOG Rider system today. At expiry (nearly two weeks ago) the setup was bullish, but there was no entry signal, and I have been watching HOG daily now for nearly two weeks, and last night the signal appeared. Please note the last candle is misdrawn by my software, but I have included suitable notes.
So I see a ''nearly Doji'' candle (only 1c between open and close) that has barely closed over the 9WMA. So the system requirements have been met - but is there some discretionary reason not to take the trade?
The next picture is the options chain and the light blue highlights are the options selected by the system. If you zoom in, you will see a very large bid-ask spread in the selected options. Buy spread is 10c and 30c, and the Sell spread is 46c and 57c, which are both significantly wide for normal HOG prices.
What should I do? Can I wait a night and see if the signal improves? Should I blindly follow the system regardless o...