• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

IWO Trading Floor

Become a Great Options Trader

  • Customer Center

Full Time Profits, February 16th 2017 – NVDA, NFLX

February 16, 2017 By Steven Place

When the market is in an uptrend, I try very, very hard to not be a contrarian. To let the trend ride and not second guess when the turn is coming.

Yet we are seeing some short term overbought signals that suggest a correction is due.

The main short term signal I see is the TurningPoint indicator on the chart above. Over the past 5 days the S&P 500 is up over 2.3%. Relative to what we’ve seen in the past, that may not seem like a lot. But there are two things to consider.

First is the vol over the past 3 months. It’s been very quiet, so we are actually hitting 2-std-dev levels… that means in the grand scheme of things we’re not overbought but when we use the past 3 months as a reference, we are quite overbought.

The second is if you go and look at the times the S&P has moved like this before, it tends to be after decent selloffs. This is an instance where we are breaking out at the highs. The market doesn’t have the “rubber band” snapback energy like it does on oversold levels, which makes this an even clearer signal.

Now in terms of a correction… what can we expect? There are three ways a market can correct… price, time, and momentum. Odds are we see another time based correction with maybe one shakeout. Unless the market can convincingly hold under 2300 then we should not expect the momentum to shift to the downside.

Trade #1: NVDA

Earnings are out and it had a failed gap higher into resistance, leading to more downside continuation. That kind of disappointment will bring in more sellers and we’ll see the lower end of the range tested. I want to see a new marginal low at 95 to start looking for an entry.

Trade Setup

Expected Price: 95

Sell to Open NVDA Apr 80/75 Put Spread 

Tier 1: Open at .60, Close at 0.20

Tier 2: Open at 0.90, Close at 0.60

Tier 3: Open at 1.20, Close at 0.90

Trade #2: NFLX

If a pullback does come, we have a rising 50 day moving average and an earnings gap fill right at 135. That’s where I want to take a position.

Trade Setup

Expected Price: 135

Sell To Open NFLX Apr 115/110 Put Spread

Tier 1: Open at .60, Close at 0.20

Tier 2: Open at 0.90, Close at 0.60

Tier 3: Open at 1.20, Close at 0.90

Disclaimer

U.S. GOVERNMENT REQUIRED DISCLAIMER – COMMODITY FUTURES TRADING COMMISSION. FUTURES AND OPTIONS TRADING HAS LARGE POTENTIAL REWARDS, BUT ALSO LARGE POTENTIAL RISK. YOU MUST BE AWARE OF THE RISKS AND BE WILLING TO ACCEPT THEM IN ORDER TO INVEST IN THE FUTURES AND OPTIONS MARKETS. DON’T TRADE WITH MONEY YOU CAN’T AFFORD TO LOSE. THIS WEBSITE IS NEITHER A SOLICITATION NOR AN OFFER TO BUY/SELL FUTURES OR OPTIONS. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE DISCUSSED ON THIS WEBSITE. THE PAST PERFORMANCE OF ANY TRADING SYSTEM OR METHODOLOGY IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY, SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN

Primary Sidebar

© 2021 Global Profit Systems International