After a week of chopping everyone up, a new leg down came through in the markets. Some of the last pockets of strength are getting hit here, and the VIX still remains pretty elevated.
Look, this is corrective action. Seeing 2% daily swings isn't the healthiest thing i the world, yet I think the base case still remains that we're in the process of knocking out the range lows of a multi-month trading range.
Which is fine. In fact, it's great. Higher vol means we get faster moving markets, both to the upside, and downside. Higher option premiums mean we can sell spreads further out and give us better odds.
It's easy to feel a little panicky in this market. Yet the process for us is the same. Pick your levels, price your spreads, scale in, scale out.
Trade #1: IBB
The 101 level has held so far, but I don't think this is a good place to enter long. Look for the flush underneath support and buyers to step back in sub 100.
I'm using the breakout open from Jun 18 as my next level... just a bit above that and we'll get some good entries.
Trade Setup
Expected Price: 99
Sell to Open IBB May 92/89 Put Spread
Tier 1: Enter at 0.50, Exit at 0.10
Tier 2: Enter at 0.70, Exit at 0.30
Tier 3: Enter at 0.90, Exit at 0.50
Trade #2: MU
It's pulling into previous resistance and the rising 50 day moving average. Earnings already out of the way, I'm looking for the stock to establish the lower end of a trading range.
Trade Setup
Expected Price: 50
Sell to Open MU May 42/39 Put Spread
Tier 1: Enter at 0.40, Exit at 0.10
Tier 2: Enter at 0.60, Exit at 0.20
Tier 3: Enter at 0.80, Exit at 0.40
Trade #3: SPX
If we get a flush THIS WEEK then I want to fade it hard.
Trade Setup
Expected Price: 2500
Sell to Open May 2335/2330 Put Spread
Tier 1: Enter at 0.80, Close at 0.30
Tier 2: Enter at 1.10, Close at 0.60
Tier 3: Enter at 1.40, Close at 0.90