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Proactive Spreads, November 30th, 2017 – NFLX, NVDA, MA

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Markets are undergoing a massive rotation.  The current narrative surrounds the “tax plan” from the US and how it will affect stocks. Financials are up huge, along with transports…

But tech took a nasty dive. Semiconductors had their worst day in months. The FANG stocks underperformed.

My gameplan here is to wait for the first dip buyers to get punished in tech. This is 2017, so it may be a one-off event and the Nasdaq will rocket to new highs, but I think the better risk/reward is to play for the larger retracement in some of these large cap tech companies.

Trade #1: NVDA

Nice high volume selloff. I’m looking for a bear flag to form… sideways or slightly higher consolidation but with no buyer conviction. The lows get taken out and we get a quick flush to 185. That’s a great risk-reward place to enter in.

Trade Setup

Expected Price: 185

Sell to Open NVDA Jan 165/160 Put Spread

Tier 1: Enter at 0.80, Exit at 0.30

Tier 2: Enter at 1.10, Exit at 0.60

Tier 3: Enter at 1.40, Exit at 0.90

Trade #2: NFLX

Same premise here. Big volume breakdown, look for the lows to get taken out. Gap fill at 180 is a good spot.

Trade Setup

Expected Price: 180

Sell to Open NFLX Jan 160/155 Put Spread

Tier 1: Enter at 0.80, Exit at 0.30

Tier 2: Enter at 1.10, Exit at 0.60

Tier 3: Enter at 1.40, Exit at 0.90

Disclaimer

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