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Proactive Spreads, August 23rd, 2018 – EA, JPM, FB

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Back on August 8th, I made a half-joke, half-serious comment that the market would trade within a 30 point range of 2850 for the next month.

Well, when you take closing prices into account, that prediction has pretty much been spot on. There’s been some light headline risk with the Lira, but other than that the market has been very rotational… very characteristic of how the market trades on the outside of earnings season.

Right now, expect more noise. Odds are we head higher, and the longer we hold above 2800 the higher the odds of continuation.

Trade #1: EA

We recently had a successful trade in this name and I’m looking for a new entry. The stock was hit hard on earnings, and I’m looking for the stock to lose the most recent level and knife down to the previous earnings breakout at 120.

Trade Setup

Expected Price: 120

Sell to Open EA Oct 110/105 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

Trade #2: JPM

Another recent successful trade that I’m looking to reenter.

There was a pretty nasty reversal in the stock just 2 days ago, and while price may just go sideways as the stock builds a base, I want to be prepared if it makes a lower low and retests previous pivot levels, along with the key 50 and 200 day moving averages.

Trade Setup

Expected Price: 111

Sell to Open JPM Oct 105/100 Put Spread

Tier 1: Enter at 0.73, Exit at 0.23

Tier 2: Enter at 1.03, Exit at 0.53

Tier 3: Enter at 1.33, Exit at 0.83

Trade #3: FB

I think facebook finally broke. The massive gap down on earnings represents a drastic change in character in the stock, and will give us some great volatility opportunities here.

The true pivot low is all the way down at 164. You don’t see it on the chart because it happened during after hours trading. I like anticipating the previous earnings gap fill here.

Trade Setup

Expected Price: 162.63

Sell to Open FB Oct 150/145 Put Spread

Tier 1: Enter at 0.78, Exit at 0.28

Tier 2: Enter at 1.08, Exit at 0.58

Tier 3: Enter at 1.38, Exit at 0.88

Disclaimer

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