After 6 green bars, RMBS has a Skyscrapper Setup at the daily 200 ma.

 Entry is Short RMBS at $18.63 (taken intraday – Pic was captured after close)

Stop is .26 above daily high at $19.51

Target is 20 ma and prior breakout area at $16.00…this is also approximately 50% retracement of longer term low to high.

Potential Risk is $.88 and Potential Reward per plan is $2.63 or approximately 3 to 1 Reward to Risk.

A 14% Return will be achieved if 100% of target is reached.

Another play for this setup is to trade the Put Option for RMBS.

The October $20 Put is “In the money” and has enough time to expiration for this play. 

Depending on the time required for the target to be hit and assuming relatively constant implied volatility a potential return of approximately 40% will be achieved if the target is reached. 

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