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Full Time Profits, October 19th, 2017 – NFLX, UNP

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Markets are finally seeing some weakness and higher volatility.

The financial journalists are having a hard time pinning down the reason behind it. And sometimes that’s OK… it’s barely a blip. They’re blaming risk out of Spain and Catalonian independence, but my feel here is that is has to do with light iPhone sales. A gap down in AAPL means a gap down for the markets, and short term traders simply start rebalancing.

It’s still just a blip. I’d love more vol to come back, but we’re simply not seeing it. A loss of 2540 would tell me that we’re due for a pickup in volatility and more two-=way action, but we simply haven’t seen that yet.

Trade #1: NFLX

NFLX came out with earnings and had disappointing price action. Think about the psychology here. If you’re an investor sitting on nice gains and see that price action after earnings, you’re definitely thinking about taking profits here. You get enough people thinking like that and you may get a nice little cascade lower.

I’m looking for a pull into the rising 50 day moving average, right at 185.

Trade Setup

Expected Price: 185

Sell to Open NFLX Dec 165/160 Put Spread

Tier 1: Enter at 0.70, Close at 0.20

Tier 2: Enter at 1.00, Close at 0.50

Hold off on Tier 3 in case we have to roll down.

Trade #2: UNP

UNP is selling off right before earnings. I think downside risk is priced in here, so selling smaller size spreads is a good place to start a trade.

Trade Setup

Expected Price: 111

Sell to Open UNP Dec 105/100 Put Spread

Tier 1: Enter at 0.77, Exit at 0.27

No Tier 2 or 3 until after earnings

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