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Full Time Profits, February 15th, 2018 – AAPL, RUT, EBAY

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It’s been a wild ride over the past two weeks.

First, let’s talk about the “why” of the selloff.

The simplest answer is… we hadn’t done it in a while. It was the longest we had gone without a 5% pullback in the history of the markets, so it was reasonable to expect some pullback.

The fundamental catalyst wasn’t any significant geopolitical event… it was structural in the market. Basically, US Treasury yields got to a level where investors poked their head up and realized that you could start getting better risk adjusted returns in bonds versus stocks. If a lot of people collectively did that all at once, then selling takes hold. Which is fine.

Now that’s part 1 of the selloff. The second part relates specifically to volatility. Meaning… it broke.

XIV, a short vol etf, collapsed because there were too many people leaning on short volatility. I believe that’s what caused the major instability to come into the markets.

As of now, that volatility “upside crash” has seemed to go away as those volatility shorts were all blown out in one big move.

This is great for us. I don’t want to go too much into it, but all the rookie vol shorts are cleaned out which means higher premiums for us to sell.

I’m looking for more two way action, with a shortable entry point into any squeeze higher. From there we should get a nice tradeable range on the indexes with plenty of individual stock dips to buy.

Trade #1: RUT

Looking to short this into it’s declining 20 and 50 day moving averages.

Trade Setup

Expected Price: 1550

Sell to Open RUT Apr 1650/1660 Call Spread

Tier 1: Enter at 1.20, Exit at 0.20

Tier 2: Enter at 1.80, Exit at 0.80

Tier 3: Enter at 2.30, Exit at 1.30

Trade #2: AAPL

I’d like to see a quick push into previous resistance. If we “grind” into that level then it’s not an easy short, but if we see 175 in the next 5 trading days then it’s a fadeable level.

Trade Setup

Expected Price: 175

Sell to Open AAPL 190/195 Call Spread

Tier 1: Enter at 0.60, Exit at 0.10

Tier 2: Enter at 0.90, Exit at 0.40

Tier 3: Enter at 1.20, Exit at 0.70

Trade #3: EBAY

Big earnings gap that was faded while the rest of the market tanked. Still a very healthy trend and holding up better than much of the market. I like an entry right here.

Trade Setup

Expected Price: 42.44

Sell to Open EBAY Apr 38/36 Put Spread

Tier 1: Enter at 0.22, Close at .02

Tier 2: Enter at 0.34, Close at 0.14

Tier 3: Enter at 0.46, Close at 0.26

 

 

 

Disclaimer

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