• About WordPress
    • WordPress.org
    • Documentation
    • Support
    • Feedback
  • Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

IWO Trading Floor

Become a Great Options Trader

  • Customer Center

Full Time Profits, January 14th, 2018 – VMW, TLT, SPX

January 14, 2019 By Steven Place

All major markets have bounced and retraced into major pivot levels. For the S&P, it’s 2600, which coincides with key support that is now potential resistance. There is also a declining 50 day moving average at 2635. This leads me to believe that as we head into these levels, fresh sellers will come into play and put a cap on price.

Here’s the contrarian part of all this– the analysis I just told you is “the truth” for the majority of investors and traders. Everyone knows 2600 is supposed to act as a brick wall. Everyone knows that the retest is going to happen.

When has majority consensus been a good path to trade in the markets before?

My “gut” here tells me two things.

First, the 2600 level won’t be a clean and easy short. You’ll end up with too many traders leaning short, and if you have enough traders covering into downside action, they create support. Then you get a second push higher which causes people to get stopped out, which leads to higher prices.

The “early shorts smoked” trade is a very reasonable hypothesis in the market.

Second, the attempt at a retest will take longer than most people think. It’s very possible the market attempts to take out 2400 again, but if there are enough investors in cash or hedged, you won’t have the same kind of energy built up. Odds are it will take a full options expiration cycle for the hedges to get burned off, and then we’ll see the kind of attempt.

That hypothesis is based on past retests after downside volatility– they tend to take a month or longer to attempt a retest.

Trade #1: VMW

VMW is the strongest stock in the market. It’s hitting new highs while most stocks are down over 10% from their 52 week high.

The chart may look different on your screen if you don’t include the $26 special dividend that was sent out in late December. I chose to include it in the chart because it gives investors a psychological cushion.

(More specifically, 396 of the S&P 500 are off 10%.)

I’m looking for a pb2bo setup – a pullback to breakout at 140 to start an entry.

Trade Setup

Expected Price: 140

Sell to Open VMW Feb 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 #2: TLT

I’m looking for a retest of the previous pivot resistance level to get long TLT.

Trade Setup

Expected Price: 119.36

Sell to Open TLT Mar 116/113 Put Spread

Tier 1: Enter at 0.45, Exit at 0.15

Tier 2: Enter at 0.65, Exit at 0.25

Tier 3: Enter at 0.85, Exit at 0.35

Trade #3: SPX

Going to start with scaling into some call spreads. I think this trade will be early, but with scaling in the trade should do fine.

Trade Setup

Expected Price: 2600

Sell to Open SPX Feb 2690/2700 Call Spread 

Tier 1: Enter at 1.75, Exit at 0.75

Tier 2: Enter at 2.35, Exit at 1.35

Tier 3: Enter at 2.95, Exit at 1.65

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

Primary Sidebar

© 2021 Global Profit Systems International