Update: July 25th, 2018
Become a Great Options Trader
By Steven Place
By Steven Place
By Steven Place
Today’s price action is confirming that, so far, the most recent move lower was simply a shakeout.
Think about the original trade thesis we’ve been working with for months– the market is working through a large, multi-month range.
As it stands, the upper end of the range is 2800, and the lower is around 2600.
If the S&P 500 can confirm a move above 2800, then we should expect new highs. This is already being confirmed in smallcaps, while the Dow is a serious laggard due to trade war risk.
(Speaking of the Dow, the level I’m watching for upside confirmation is around 25,400.)
My bias still remains higher, but I don’t think it will be the same kind of price action we saw in 2017. More volatility, more back and forth.
Great move on earnings, the stock has faded to nearly half of the gap higher. I’m expecting these levels to hold and the stock to make a rn back to 80.
Trade Setup
Expected Price: 77.11
Sell to Open NKE Aug 72.50/70 Put Spread
Tier 1: Enter at 0.24, Exit at 0.04
Tier 2: Enter at 0.40, Exit at 0.10
No Tier 3, May Need To Roll to Sep.
Conoco is the strongest large cap oil name. I’m expecting continuation higher into its earnings event.
Trade Setup
Expected Price: 70.77
Sell to Open COP Aug 65/62.50 Put Spread
Tier 1: Enter at 0.31, Exit at 0.06
Tier 2: Enter at 0.50, Exit at 0.25
No Tier 3 – Earnings
The Russell 2000 Index is up 3.5% over the past 5 days. Starting to get a little overbought here.
I think trying to short into obvious resistance is too obvious and too crowded. Instead, I want to see an extension above the most recent levels as the early shorts get smoked.
Trade Setup
Expected Price: 1730
Sell to Open RUT Aug 1790/1795 Call Spread
Tier 1: Enter at 0.75, Exit at 0.25
Tier 2: Enter at 1.05, Exit at 0.55
Tier 3: Enter at 1.35, Exit at 0.85
By Steven Place
To manage the risk in this trade, roll the put spread down and out. This will “lock in” a loss, increase opex probabilities, keep us in the trade a month longer, and help reduce risk of a large loss.
This is a rolling trade, so don’t open the new spreads until after the old spreads are closed out.
Buy to Close CAT Jul 140/135 Put Spread @3.17
Sell to Open CAT Aug 125/120 Put Spread @0.86
WHEN FILLED
Buy to Close CAT Aug 125/120 Put Spread @0.16