IWO Trading Floor

Become a Great Options Trader

Proactive Spreads, May 3rd, 2018 – COP, IBB

By

Another day, another shakeout. This morning it looked as though the market was finally going to give it up and we’d see a swift move to 2500.

And then… buyers showed up. Again. This is the same playbook as two days ago… and last week… and last month…

Yet now I’ll go ahead and put it out there– buyers aren’t in control. We’ve had a series of lower highs and lower lows.

My new key level is 2680. The longer we hold under that level, the higher the odds of a proper rollover. I’m not expecting a crash, but 2500 is plausible.

And if the market manages to clear and hold 2680, then we’ll assume a move to 2800 is on deck.

Overall base case still holds… the market is working out a large, multi month, range correction.

Trade #1: COP

This is the healthiest uptrend of all the major oils (XOM, CVX, COP).

A retrace to the gap fill at 5/11/18 would be a great dip buy. This may be one we miss if the oil momentum keeps up.

Trade Setup

Expected Price: 62.50

Sell to Open COP Jun 57.50/55 Put Spread

Tier 1: Enter at 0.32, Exit at 0.07

Tier 2: Enter at 0.47, Exit at 0.22

Tier 3: Enter at 0.62, Exit at 0.37

Trade #2: IBB

IBB has tested the 102 level too many times. I’m looking for aa flush to the June 2017 breakout open.

Trade Setup

Expected Price: 98

Sell to Open IBB Jun 90/85 Put 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

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