The main factors I used were:
14 Day ATR to measure expected movement and volatility
8 and 21 Day Moving Average Cross for trend direction
Price compression before expansion
RSI weakness below key levels
MACD momentum shift and bearish crossover
What stood out in both setups was the combination of declining momentum and breakdown below support zones, while ATR suggested there was still enough room for movement. Instead of buying naked puts, I chose put spreads to control risk while still positioning for downside continuation.
CRCL: NYSE
Trade 1: CRCL
Ticker: CRCL
Type: Put Spread
Strikes: 80 / 75
Entry: 80
Expiry: July 10
Option Cost: 3.3×100 = 330
Potential Profit: 5×100 = 500-330 = $170
Why I picked CRCL?
CRCL showed a clean breakdown below support after losing momentum near the moving averages. The 8 EMA stayed below the 21 EMA, RSI dropped under 40, and MACD continued expanding negatively. ATR also suggested the stock still had room to move lower.
The stock had been compressing for several sessions before finally breaking down, which is one of the main patterns I watch for because compression often leads to expansion moves.
COIN: NASDAQ
Trade 2: COIN
Ticker: COIN
Type: Put Spread
Strikes: 150 / 145
Entry: 150
Expiry: July 10
Option Cost: 2.95×100 = 295
Potential Profit: 5X100 = 500-295 = $205
Why I picked COIN
COIN had a similar structure with weakening momentum and a clear breakdown below support. RSI continued trending lower, MACD remained bearish, and the stock failed to reclaim the short-term moving averages.
One thing I liked about this setup was how price repeatedly failed near resistance before finally losing support. Combined with elevated ATR, it created a favourable environment for a downside spread rather than chasing directional puts.
What I’m Tracking Next
For both trades, I’ll mainly watch:
Whether the price continues below support levels
ATR expansion after the breakdown
MACD momentum continuation
RSI is staying weak instead of reversing quickly
Whether the 8 EMA remains below the 21 EMA
I prefer spreads in these situations because they define risk upfront while still allowing solid reward potential if momentum continues in the expected direction.
Disclaimer
This content is for educational and informational purposes only and reflects my personal market analysis and trading process. I am not a financial advisor, and this is not financial advice, investment advice, or a recommendation to buy or sell any security or options contract.
Options trading involves significant risk and may not be suitable for all investors. Trades shared here are based on my own research, technical analysis, and risk tolerance using indicators such as ATR, moving averages, RSI, MACD, and price action. Market conditions can change quickly, and past performance does not guarantee future results.
Always do your own research, manage risk carefully, and consult a licensed financial professional before making investment decisions.
Final Note:
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