IWO Trading Floor

Become a Great Options Trader

Proactive Spreads, July 27th, 2018 – FB, V, CRM

By

Instead of looking at the S&P 500, we’ll focus on tech. Specifically, the Nasdaq.

Let’s talk about the price action over the past few days.

First, on Wednesday, there was a huge ramp higher into the news that some of the Tariff voodoo is going away with a deal in Europe.

Then… Facebook happened.

Down 20% on earnings, over 150 billion in market value erased.

I’ve tried, really tried, over the past 2 days, to try and think about another similar instance. Where you have one of the largest companies in the market take such a large hit on earnings.

I can’t think of one from the past decade.

Now when the number came out, all I thought was “Man, tech is gonna get smoked tomorrow.”

And then the Nasdaq finished unchanged on the day.

When you have a “black swan” event in one of the biggest stocks in the market, you’d think that there would be some fears of contaigon. It wasn’t lining up.

Now I’m writing this on Friday at lunch, specifically because the discontinuity is going iaway. The QQQ’s are down 1.5% on some decent volume.

I don’t know if the facebook earnings is a one-off event, but it should introduce extra volatility and fear into the market. That’s what I’m looking for… another dip to play.

Trade #1: FB

I’ll say this right now… early dip buyers are going to get smoked in FB. The day’s lows are not the actual lows, it’s actually down at 165. If the stock heads toward that then I’ll start fading the stock.

Trade Setup

Expected Price: 167

Sell to Open FB Sep 150/145 Put Spread

Tier 1: Enter at 0.65, Exit at 0.15

Tier 2: Enter at 0.95, Exit at 0.45

Tier 3: Enter at 1.25, Exit at 0.75

Trade #2: V

Earnings are already out, and the stock is getting hit hard. I’m looking for a retest of previous resistance, which is now potential support.

Trade Setup

Expected Price: 136.30

Sell to Open V Sep 130/125 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 #3: CRM

I want a pullback to the 50 day moving average (not shown on the chart).

Trade Setup

Expected Price: 138

Sell to Open CRM Sep 125/120 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