Some traders only know one direction.
Those who only buy breakouts, dips, and wait for green candles to chase the momentum higher…
They’ll crush it in a bull market.
But we’re not in a bull market right now.
CEOs of JPMorgan and Goldman Sachs are publicly warning of a major decline ahead as the VIX spikes past February’s highs.
Sectors that looked bulletproof three weeks ago are quietly rolling over.
And traders who only know how to go long are in for a rough ride. But those who can read both sides of the market are just as well off.
I made a bearish trade this week that proves this exact theory.
When the Chart Tells You to Flip
This stock is in one of the most hyped sectors of the last five years.
You know it. Wall Street and the government alike have thrown billions at this market for years. The narrative is enormous. But the valuations show signs of disconnect from reality.
It’s not AI…
This week, a stock in this sector gasped for air as its latest spike ran out of gas.
Four straight days of gains as the price blasted through a key resistance level. Those kinds of moves don’t last forever…
I’ve seen this pattern before.
When a stock in a weakening sector spikes for a fourth consecutive day, we can expect a coming pullback.
This setup was too clean to ignore.
I sent out an alert for everyone to watch this bearish momentum.
The Trade
The stock is Rivian Automotive Inc. (NASDAQ: RIVN).
It had just completed its fourth consecutive up day, surging through the $16 level on momentum alone.
EV stocks as a sector are extended. And the market is under stress due to Chinese popularity. The move made no fundamental sense given where the broader market was heading.
Here’s the alert I sent on March 10:
The thesis was simple:
An overextended stock in a weakening sector, making lower highs, is a textbook candidate for a sharp reversal. The options contract gave me defined risk with leveraged exposure if RIVN pulled back toward fair value.
Here’s the price action on RIVN around the trade:
The stock fell roughly 3% between my entry and exit alerts.
That might not sound like much. But that’s not how options work.
On a short-dated contract, a 3% move in the underlying stock gets multiplied exponentially. The leverage is built in.
That’s the entire reason I use options instead of shorting shares outright: defined risk on the entry, amplified reward on the move.
I sent the exit alert the following afternoon:
Why Playing Both Sides Changes Everything
Most retail traders are permanently long.
They buy stocks. They buy calls. They wait for things to go up. And when the market turns against them, they hold and hope.
The traders who last through every market cycle learn to read price action in both directions.
RIVN was a perfect example. While some traders were chasing the fourth green candle, hoping for a fifth, I was positioning for the reversal.
The Next Setup
The market is giving traders like us a gift right now.
Volatility creates chaos. Chaos creates mispricings. And mispricings, whether to the upside or the downside, are exactly where options traders make money.
But you have to know what you’re looking for. You have to know how to read the chart, identify exhaustion, size your position correctly, and get out at the right time.
That’s not something you figure out by accident…
On March 17th and 18th, I’m hosting an all-inclusive bootcamp where we walk through how I find these setups on both sides of the market.
The same framework I used on RIVN.
The same process I’ve used to navigate ten years without a single losing quarter.
And reap the benefits for a lifetime.
Stay Street Smart,
Jeff Zananiri
*Past performance does not indicate future results, Not typical.
