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Proactive Spreads, September 28th, 2017 - AMZN, CAT, NFLX

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It has been a tale of two tapes.

First, take a look at the S&P 500 chart above. This is the lowest volatility recorded. Ever. Sideways action, barely any movement.

Yet if you look at the energy sector (XLE), it's been on a massive tear.

If you look at some of the large cap tech stocks, they been hammered on a pre-earnings shakeout.

And then you have the Russel 2000 Index. Which just had a massive move after it has already broken out.

This market correction is time-based and rotational. And boy, is that some rotation.

Trade #1: AMZN

After a failed breakout over 1,000, AMZN continues to trade at the lower end of its range. When a support level is tested multiple times in a short period, odds are we see a breakdown. I'm looking for 910-900 to act as the magnet and next support level.

Trade Setup

Expected Price: 910

Sell to Open AMZN Nov 840/835 Put Spread 

Tier 1: Enter at 0.80, Close at 0.20

Tier 2: Enter at 1.10, Close at 0.40

Hold off on Tier 3 as we may need to roll before earnings.

Trade #2: CAT

Simple bet here, looking for a pull into 120 to retest some prior pivot levels.

Trade Setup

Expected Price: 120

Sell to Open CAT Nov 110/105 Put Spread

Tier 1: Enter at 0.60, Close at 0.10

Tier 2: Enter at 0.90, Close at 0.30

Tier 3: Enter at 1.20, Close at 0.80

Trade #3: NFLX

Another tech stock that is weak-- look for a test of recent range lows.

Trade Setup

Expected Price: 165

Sell To Open NFLX Nov 145/140 Put Spread

Tier 1: Enter at 0.80, Close at 0.20

Tier 2: Enter at 1.10, Close at 0.40

Hold off on Tier 3 as we may need to roll before earnings.

Disclaimer

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