Markets are undergoing a time-based, rotational correction… again. I feel like a broken record, but the same points can be made here. We are in a period of historically low volatility in the broad markets while underneath the surface individual sectors and stocks are moving around a little better and giving us opportunities.
I would love– LOVE market vol to come back… even just to 2016 levels. This doesn’t feel normal, both in the statistical sense and what I feel in my gut.
Right now we’re headed into earnings season, and we’ll play some post earnings moves as they come along (like what we’re looking for in Citigroup from last week).
A loss of the breakout level from October 5th– that would be 2540 on the SPX, would indicate buyers in the short term have lost control. Until then, assume the grind continues.
Trade #1: FDX
The stock already has earnings out so we can look to play it here. I’m targeting a pullback to the 50 day moving average, along with that trendline support.
Trade Setup
Expected Price: 215
Sell to Open FDX [1 Dec 17] 202.5/200 Put Spread
These are weekly, not monthly options!
Tier 1: Enter at 0.30, Exit at 0.05
Tier 2: Enter at 0.45, Exit at 0.20
Tier 3: Enter at 0.70, Exit at 0.30