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  • Matt DeLong

As an options trader, how do you determine trend?

What would you say the trend is here on this stock? Uptrend? YEP!



I think about it like this (uptrend, wait for a pullback, play the break higher — by selling the put short — so I’m bullish on the underlying stock):

  1. Established uptrend — absolutely essential because the trend tends to continue — even after pullbacks shown by the black candles.

  2. Pullback of price action below the “donchian channel” (20) midline (orange line).

  3. ONLY on a black candle, sell 45–90 DTE (days to expire) naked puts or bull put spread using the “strike price” below the low line or most recent support.

I get paid the option premium regardless of whether I’m right or not. When the options expire, the options will either expire worthless (good for me) or the stock is ”put“ to me (unknown risk). There is risk involved here that you have to be aware of, but essentially I am getting paid to buy the stock at a discount of where the price currently is. I do this continually on my favorite stocks.

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