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Proactive Spreads, August 16th, 2018 – AMZN, SHOP, MU

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I’ll consider yesterday’s move a proper “retest” of the 2800 pivot. At that level there were eager buyers and some China news helped the market gap up higher.

As it stands, the “macro” risk out of Emerging markets, Turkey, China, and that whole mess…  it seems to have taken a back seat.

I think I would prefer 2800 to get taken out. I’d like a little more volatility, and a wider range than the 50 point one we’ve been stuck in for a month.

Yet as it stands, odds are we move higher. It will be rotational… because the S&P doesn’t tell the whole story. Facebook and NFLX both had terrible price action so we could have a scenario setup where large cap tech takes a bath while the rest of the market runs.

Trade #1: AMZN

I’m looking for a deep retracement here. I think AMZN has the look of a failed breakout, and if the rest of tech (excluding AAPL) is weak then this could easily follow suit.

Trade Setup

Expected Price: 1800

Sell to Open AMZN Oct 1640/1630 Put Spread

Tier 1: Enter at 1.72, Exit at 0.72

Tier 2: Enter at 2.32, Exit at 1.32

Tier 3: Enter at 2.92, Exit at 1.92

Trade #2: MU

Semi’s all have dropped hard, and with NVDA earnings out, MU is selling off hard into support. I like it as it comes back into this level and possibly moves into the range from a few months ago.

Trade Setup

Expected Price: 46

Sell to Open MU Oct 39/36 Put Spread

Tier 1: Enter at 0.33, Exit at 0.03

Tier 2: Enter at 0.48, Exit at 0.18

Tier 3: Enter at 0.63, Exit at 0.33

Trade #3: SHOP

I want a post-earnings lower low to start scaling into some spreads.

Trade Setup

Expected Price: 128

The bid/ask is wide on this and my pricing models are goofy, so wait for those prices to get closer before you start floating LMT orders out. I’ll try my best here with the modeled prices.

Sell to Open SHOP Oct 105/100 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

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