Update: April 11th, 2018
Closing out with intent to reenter.
Become a Great Options Trader
By Steven Place
By Steven Place
Look at the price action from last Friday. A huge selloff and finishing on the lows to end the week.
“Textbook” analysis would say we’re due for followthrough. That finishing on the lows on a friday like that would lead to more capitulative price action.
I guess not.
Right now, the S&P is up over 2.75%. The Nasdaq is up over 3%. Facebook is well off the lows.
Markets move in cycles. They aren’t up-down cycles, they are up-range-down-range cycles. Right now, we’ve seen volatility expand yet this price action is more rangebound than anything else. Don’t expect a trend to emerge, just expect the market to oscillate around 2700 for a while.
In terms of new trades… there aren’t any. I’m not going to try and add more bull put spreads into a market that just had this move. What you should be doing now is starting to scale out of all the put spreads you sold over the past week. Use the execution prices provided, and if you’re super concerned about this market, then just take off one or two positions that you “hate” the most into this kind of move.
I’ll be sitting on my hands and will watch to see how the market trades into 2700.
By Steven Place
By Steven Place
By Steven Place
Markets are getting a little looser. The headlines say “trade war” but the true narrative driving price is Fed voodoo. Yesterday there was a Fed meeting that led to a small amount of strength that was aggressively faded throughout the rest of the day and into the overnight session.
My base case is currently reversion, yet the longer price is “accepted” at current levels, the fewer buyers will be in control, which could potentially lead to a loss of 2600. Both the Nasdaq and Russell 2000 are holding up much better, and that may help reinforce the “trade war” narrative that’s pushing forward.
Right now my trade strategy remains to sell put spreads into pullbacks on good relative strength names.
Great earnings report, the stock has been in a solid uptrend for months. The conversion to a SAAS company has definitely helped their model. I”m looking for a retest of the most recent pivot high.
Trade Setup
Expected Price: 210
Sell to Open ADBE May 190/185 Put Spread
Tier 1: Enter at 0.70, Exit at 0.20
Tier 2: Enter at 1.00, Exit at 0.50
Tier 3: Enter at 1.30, Exit at 0.80
Looking for a pull into the rising 50 day moving average.
Trade Setup
Expected Price: 1470
Sell to Open AMZN May 1260/1250 Put 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 2.40, Exit at 1.40
Looking for the 50 day moving average and prior support.
Trade Setup
Expected Price: 170
Sell to Open MA May 155/150 Put Spread
Tier 1: Enter at 0.70, Exit at 0.20
Tier 2: Enter at 1.00, Exit at 0.50
Tier 3: Enter at 1.30, Exit at 0.80
By Steven Place