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TRANSCRIPT
By Jeff CooperProfessional TraderBest-Selling Author
How to Profit From a Volatility
Explosion
Copyright © T3 Live LLC. All Rights Reserved.
The Hit and Run Chronicles, Volume 1
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Table of Contents3) Disclosures
4) About Jeff Cooper
5) How to Capitalize on Volatility
6) Case Study 1: The VXX Explosion
7) Case Study 2: Profiting from a Left for Dead IPO
8) Case Study 3: Facebook’s False Breakout
9) Case Study 4: Cirrus’ Big Holy Grail
10) Case Study 5: The GDXJ Lightning Rod
11) Case Study 6: Shiny Silver
12) Your Next Steps
13) About T3 Live
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DisclosuresT3 Live, LLC is a financial publisher that disseminates information about economic, business, and capital markets
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About Jeff Cooper
Jeff Cooper began his trading career at Drexel Burnham in 1981.
In 1986, Cooper went out on his own, choosing to trade exclusively for himself.
After establishing a successful career as a private trader, he went on to write two
best-selling books: Hit and Run Trading: The Short-Term Traders’ Bible and Hit and
Run Trading 2: Capturing Explosive Short-Term Moves in Stocks.
Today, Jeff trades from his home in Malibu, California, and authors Hit and Run
Trading for hundreds of professional traders, portfolio managers, and individual
investors across the globe.
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How to Capitalize on Volatility
February 2020 may go down in history as an historic disruption of volatility.
After a never-ending streak of all-time highs, a combination of stretched technical
and the Coronavirus sent markets tumbling.
So when things go bad, why do traders have such a hard time making money?
After all, it’s not like they don’t know bearish patterns.
I think it’s a combination of inexperience and fear.
And this is where I believe I set myself apart.
Many traders study short strategies. But they are not used to actually executing them
in the heat of the battle.
I’ve been a professional trader for over 3 decades, so I’ve experienced everything
from the 1987 crash to the dot com implosion to the housing crisis to the flash crash,
plus everything in between.
So I have no trouble pulling the trigger when things go against me. To me, a short is
just a long upside down. I’m not attached to a market direction, so I’m 100%
comfortable betting against the major averages.
And in this report, I’m going to walk you through 3 trades that paid off big for Hit and
Run subscribers when markets stopped running wild.
Turn the page to get started!
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The VXX Explosion
On Friday, February 21, the SPX was set to break a trendline connecting the
October and December low.
There was a similar setup in January, but in that case, the SPX ended up breaking
back above the trendline.
I believed a break of the trendline would fail this time around because we were
looking at a secondary high, or test failure. So I thought any break would be
dramatic, and it was.
On the afternoon of 2/21, I made the call to buy March $15 VXX calls. Why VXX
calls instead of SPY puts? Simple -- I thought I’d volatility could overshoot even more
tha than the market. We were filled at $1.43.
We sold half on the following Monday at $2.46 for a 72% gain, and the second half
Tuesday at $3.65 for a 1.55% gain -- one of our best trades of the year.
2/21
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A Left for Dead IPO
It’s common for hot money to jump on an IPO… and then leave it for dead.
That can lead to superior opportunities to buy the dip.
In February, new issue Schrodinger (SDGR) popped.. and then dropped.
It pulled back and then carved out an NR 7 day (the narrowest range in 7 days). The
NR 7 day is often a sign that sellers are gone, and that volatility is likely to quickly
expand.
We initiated our long on February 12 at $27.90.
We sold half at $30.40 for a $2.50 gain on February 18, and half at $35.40 for a
$7.52 gain on February 19.
We had 3 more trades in SDGR along the way, 2 of them profitable.
The lesson?
The best time to buy a hot IPO is often AFTER the hot money leaves.
2/21
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Facebook’s False Breakout
I like to say that “false moves lead to fast moves.” So let’s talk about one.
Facebook (FB) had a false breakout on January 29 when it knifed up before gapping
down on earnings.
Facebook then rallied back up, filling the gap -- without reaching that false breakout
point. Then on February 20, it put in a down LROD (large range outside day) with a
close below the 50 day moving averages. Range expansions often lead to more
movement..
So the next day, on February 21, we got short at $209.75.
We covered half on February 25 at $204.55 for a $5.20 gain.
And we covered the second half the day after at $201.50 for an $8.25 gain.
False Breakout
Short
Trade
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Cirrus’ Big Holy Grail
The Holy Grail Sell is one of my favorite setups. It is defined as a backtest of the 20
day moving average during a well-defined downtrend.
On January 30, Cirrus Logic (CRUS) gapped to a new high before closing at
session lows. This is a classic sign that institutions are unloading on strength, and it
often means more sellers are about to come out of the woodwork.
That drove a downtrend, leading to a backtest of the 20 day -- the Holy Grail Setup
outlined above.
We got short on February 19 at $80.07. We covered half the next day for a 99 cent
gain, and the second half on February 24 for a $7.83 gain.
So when a downtrending stocks bounces to test the 20 day and fail -- watch!
Because more weakness may be coming.
Gap Up Gets
Sold
Backtest of
the 20 day
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The GDXJ Lightning Rod
As I discussed on page 8 with Facebook, a Large Range Outside Day (LROD) -- or
Lightning Rod -- typically precedes movement.
On February 7, GDXJ put in a red LROD day, which had me on guard for a drop.
However, GDXJ did not follow through to the downside, and it turned up after a close
on the 50 day.
So I wanted to get positioned for a slingshot higher.
On February 10, I made the call go get long GDXJ March $42 calls at $1.15.
We sold half on February 21 for a $2.22 gain (92%).
Then we sold the second half on February 24 for a $3.62 gain (214%).
Large Range
Outside Day
Holds 50
Day
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Shiny Silver
On February 6, silver play Wheaton Precious Metals (WPM), turned up from a
20/50 Bowtie -- which is when the 20 and 50 day moving averages are “pinching.”
I suspected a 180 Buy Signal was setting up. This is when an uptrending stock
closes at or near session lows on one day before closing at or near session hghs the
next day.
So we got long WPM April $29 calls at $1.49.
We sold half on February 18 for a $2.94 gain (97%).
And we sold the second half on February 24 for a $3.41 gain (228%!)
This was our #1 trade of 2020 -- but hopefully, we can top it!
Turns Up
After
Bowtie
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Your Next Steps
If you’d like my trade ideas and commentary on a daily basis, visit this page
to get started.
If you act now, you can get my special Hit and Run Trading bundle for a very,
very reasonable price.
It includes:
● A hardcover copy of my best-selling book Hit and Run Trading
● 30 Days of Access to the Hit and Run Trading newsletter service,
including 2 daily newsletter and a private Twitter feed
● My Hit and Run 2.0 course with 2 full hours of video training
Hit and Run Trading is perfect for the active trader that wants daily day and
swing ideas, plus a complete training program.
If you haven’t been getting the results you want, then give it a shot:
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About T3 Live
T3 Live was founded to help investors like you generate income and build
wealth.
Our approach includes a mix of trading, training, and technology to help you
succeed in all market conditions.
T3 was founded by traders, not marketers.
We know what works because we've been in the trenches, trading for a
living.
If you have any questions about this report, your account, or any of our
services, please email us at [email protected], or call us at 1-888-998-3548.