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Proactive Spreads, November 6th – FDX, RUT

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Markets hitting all time highs again. VIX near historic lows.

Lather, rinse, repeat.

Meanwhile, the Kingdom of Saudi Arabia just got completely turned on its head and the Federal Reserve Board is getting fresh blood. Uncertainty is there, but it’s not being seen in the broad markets.

This is partly because of good stock return dispersion. It’s not all peachy under the surface. While large stocks like AAPL and AMZN look great, the retail sector is bloody and TV/Telecom has seen better days. If you’re rooting for a bear market, it’s there, just not in everything.

Gameplan is the same, buy dips on good trending stocks until the trend changes and we can shift back to two-way trade setups.

Trade #1: FDX

This is a trade we looked at in October, but we never got to our key price. The stock is now down to the 50 day moving average and key trendline support.

Trade Setup

Expected Price: 221

Sell to Open FDX Jan 210/200 Put Spread (10 wide)

Tier 1: Enter at 1.70, Exit at 0.30

Tier 2: Enter at 2.30, Exit at 1.30

Tier 3: Enter at 2.90, Exit at 1.90

Trade #2: RUT

Smallcaps have done NOTHING for two months now. It’s the tightest voilatility we’ve seen in a very long time, and it’s been a super choppy mess.

Because the overall trend is up, we should expect resolution to the upside… but I think this market is setting up for a rug-pull. The bid will drop out to trigger a bunch of stops, then the institutional players will sweep up the mess and drive the market back higher.

I want to buy those stops. Look for a swift move to 1470 to sell some spreads into.

Trade Setup

Expected Price: 1470

Sell to Open RUT 29Dec (Quarterlies) 1400/1390 Put Spread

Tier 1: Enter at 1.30, Exit at 0.20

Tier 2: Enter at 1.90, Exit at 0.90

Tier 3: Enter at 2.50, Exit at 1.50

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