weekend Ed

Right Trade, Wrong Timing: The RXRX Lesson
By Brandon Chapman

I took a loss on RXRX last week.

Closed the position for $0.12. Paid $0.31. Lost $0.19 per contract.

Then Wednesday happened. The stock ripped to $6.30. My expired options would have been worth over $0.80.

This is the hardest lesson in options trading. Being right about direction means nothing if your timing is off by a week.

The setup was textbook: Open interest at the $5.50 strike showed massive positioning. The gamma level acted like a coiled spring. Everything pointed to an imminent breakout. The analysis was correct. The signals were accurate. The move happened exactly as predicted.

Just one week too late.

This is what I'll be covering in Monday's Ghost Prints Session. 

How to identify these high-probability setups and the strategies for managing the timing challenge that separates winning options traders from everyone else. 

Click Here to reserve your spot.

Because the signals work. 

The real skill is matching your expiration to the market's timeline.

And there’s always room for improvement.

The Setup Was Perfect

While the market inched toward new all-time highs, RXRX was languishing. The stock drifted sideways. No momentum. No excitement. Most traders ignored it completely.

But the open interest told a different story. Massive positioning sat at the $5.50 strike. 

These stocks can make extraordinary moves at any moment. The gamma level at $5.50 acted like a coiled spring. A breakout above that level would trigger accelerated movement as market makers scrambled to hedge their exposure.

The technical setup aligned with the options positioning. Everything pointed to an imminent breakout. I entered the trade expecting RXRX to punch through $5.50 and keep running.

The Price Refused to Cooperate

The stock floated around $5.50. It tested the level. It bounced off the level. It came back and tested again. The gamma level held the price in a tight range like gravity.

Time decay was eating the premium. The expiration date was approaching. The breakout I expected wasn't materializing in the timeframe I needed.

I made the call to close. Took the loss at $0.12. A $0.19 hit per contract. Not catastrophic, but painful when you know you read the setup correctly.

This was a high reward, low probability trade from the start. You accept losses as part of the process with these setups. The expected value justifies taking multiple small losses to catch one big winner.

Then the Move Happened

Wednesday arrived. RXRX finally broke through $5.50. The stock ripped to $6.30. Exactly the move the open interest predicted. Exactly the breakout the gamma level suggested would happen.

My expired options would have been worth over $0.80. A winner instead of a loser. A significant profit instead of a small loss. All because of one week of timing.

This outcome doesn't invalidate the strategy. It actually confirms it. The large option trades provided valuable information. The gamma level at $5.50 did create the explosive move higher. The resulting impact was irrefutable.

The trade just didn't capture the full opportunity because of timing.

The Brutal Truth About Directional Options

With directional option trades, you need to be right on two things. Direction and time.

Being right on direction alone doesn't pay. The stock can do exactly what you expect. The move can materialize precisely as the signals suggested. But if your expiration date arrives before the move happens, you lose money.

This reality separates options trading from stock trading. Stock traders can be early and still profit if they aren’t stopped out. They hold through the consolidation. They wait for the breakout. Their position doesn't expire.

Options traders face a different game. The calendar works against you every single day. Time decay erodes premium whether the stock moves or not. Expiration creates a hard deadline that doesn't care about your analysis.

The RXRX trade taught this lesson clearly. The analysis was correct. The signals were accurate. The move happened. The timing was wrong by one week. The result was a loss instead of a significant win.

What This Means for Your Trading

Losses like RXRX don't prove or disprove a strategy. They reveal the inherent challenge of timing in options trading. The information from large option trades remains valuable. The gamma levels still create real effects on price action. The strategy still works.

But execution requires accepting that even correct analysis can produce losses when timing misses. This is why position sizing matters so much with directional options. You need room for multiple attempts. You need the ability to take several small losses while waiting for the big winner that makes the entire approach profitable.

The Ghost Prints signals showed the setup in RXRX. The open interest revealed the potential. The gamma level indicated where the breakout would trigger. All of that information was correct and actionable.

The expiration date just didn't align with when the market decided to make the move.

Join me for Monday's Ghost Prints Session where I'll break down how to identify these setups and discuss strategies for managing the timing risk that comes with directional options trades. 

The signals work. The challenge is matching your expiration to the market's timeline. Let me show you how to improve your odds.

Brandon Chapman

Creator of the Ghost Prints System