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Proactive Spreads, September 25th, 2018 – UNP, PFE, LULU

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I can tell you one thing about this market… it isn’t 2017.

If this were 2017, then we would be about a week away from tagging 3000 with no pullback in sight. Instead we have what I would consider a more normal market, from a statistical standpoint. The market gaps higher into all time highs, finds some sellers and then pulls in.

And underneath the surface there’s churn, rotation, yet everything is holding up. We’re going to stick with the setups that have continued to work all year and let the churn and volatility play in our favor.

Trade #1: UNP

The stock had a large move on news about restructuring to profitability. I’m looking for a half-gap fill to play.

Trade Setup

Expected Price: 160.35

Sell to Open UNP Nov 150/145 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

Trade #2: PFE

Looking for a pullback to breakout (pb2bo) pattern.

Trade Setup

Expected Price: 42.75

Sell to Open PFE Nov 41/38 Put Spread

Tier 1: Enter at 0.36, Exit at 0.06

Tier 2: Enter at 0.56, Exit at 0.26

Tier 3: Enter at 0.76, Exit at 0.46

Trade #3: LULU

This is a “wishful thinking” trade setup. I want to see a pre-earnings shakeout underneath most recent price support.

Trade Setup

Expected Price: 148.96

Sell To Open LULU Nov 135/130 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

Disclaimer

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