Beyond Meat (BYND) is on investors and options traders’ minds again, so its no surprise we’ve fielded a lot of questions regarding our recent stock and options trades. The rally from the Tuesday open has been spectacular. As such, we’re researching catalysts and sentiment which will enable traders spidey senses, gauging the voracity of the current move.
Basically, the company says it is adding new facilities to satisfy the needs of clients like McDonald’s (MCD), Dunkin Donuts (DNKN), and grocery stores among others.
I found myself ranting away this morning, sharing my thoughts with Mikey, one of our oldest and dearest members. In the trading room, he goes by “heartpumper77,” technically called a “perfusionist” a medical professional who keeps your heart pumping (duh) during surgery.
“Researching BYND this morning – GOOGLE making it impossible to find anything current, ranking everything “they” think I want to see when all I see are pages of stuff (very few current) ranked to provide hits for ads – sick – then I go to duckduckgo (better ranking) – read a few pieces that have absolutely zero information – just a lot of words and paragraphs with more advertizing than content, then I hit on The Atlantic where the article is supposed to be about BYND and winds up being a piece talking about climate change and morality. WTF? Millennials are you clueless? I’m being sarcastic of course.”
Ok, back to what this post was supposed to be about. The above was meant as a little Fry-day trading humor. Below we talk about how “we intend to trade the stock and options.”
Beyond Meat – Trade Questions
Many of the questions fielded yesterday in the trading room centered around our approach to trading the breakout on Tuesday. Credit goes to Steven in the trading room who gave me the early heads up Tuesday morning. Steven goes by “Catwalkakassh2265.”
My head was on the swivel. “9:45 AM, whats the volume look like?” Hmmm, RVOL is at 2.5 and rising fast. Check the “daily” chart. “base breakout potential, price above the 9ema, 21d just overhead, check.”
Obviously, on Tuesday, all we saw was the beginning of a “potential” base breakout. What told us that? Answer: Relative Volume.
At 9:46 AM I’m thinking, the stock is moving fast, and starting to flag. Placing my stop under this first flag (5min chart) as the flag is close by, so just do it. Stock breaking above the flag, 9:50 AM candle. The stock flags again at 10:00 and 10:20 AM. Bought the calls, 2 weeks out, just out of the money, as the monthlies were too expensive.
We like buying on flags, then adding on dips when buyers show up. We also like to see price action above VWAP after the opening range (approx 10:00 AM). RVOL was above 3.0 at this point. As the stock moves higher we’re moving our stops and alerting the trading room.
We usually sell some on the morning pop. Just repeat the process until the character changes.
At this point, nearing the close, RVOL was 7.0 if I remember correctly.
The 30min shows how RVOL the relative volume is way above January 3, Friday and January 6, Monday, making this trade an easy decision. Relative volume tells us the stock is “in play.” BYND continues to ramp higher Tuesday, gets really active on Wednesday as more traders see it, then Thursday even more traders show up. The volume is confirming.
Price action remained above VWAP on Tuesday and Thursday. Wednesday was a little concerning as the price stayed below VWAP most of the day.
Note how price action was above 5-day VWAP and how it was supportive Thursday morning. This is the reason we decided to swing some of the positions. My answer was yes, thanks to 5day VWAP.
Here we see Doc doing exactly as we do. We buy the pullbacks once buyers show they are still actively interested.
Now we’ll sell the pop this morning as shorts scramble. We’ll look to buy again on pullbacks next week.
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Happy Trading,
Vinny
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