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Proactive Spreads, February 26th, 2019 – BA, NKE, ETSY

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The S&P gapped up into the 2800 resistance level and buyers finally seemed to have run out. While the near term rally may not yet be over… I think we’re close. The market has spent a lot of energy rallying up to key resistance without any kind of major pullback. I expect that the correction will be sideways and rotational… not anything like we saw in the Q4 2018 correction.

The best plan of attack now is to start finding your favorite stocks and levels you want to be involved in. Many overextended stocks will still keep their trend and strength into pullbacks, so we want to be ready if and when profit taking shows up.

Trade #1: BA

Looking for pullback to the previous breakout level.

Trade Setup

Expected Price: 412.44

Sell to Open BA Apr 385/380 Put Spread

Tier 1: Enter at 0.85, Exit at 0.35

Tier 2: Enter at 1.15, Exit at 0.65

Tier 3: Enter at 1.45, Exit at 0.95

Trade #2: NKE

Similar as in BA – I want to see a retest of the most recent pivot highs.

Trade Setup

Expected Price: 82

Sell to Open NKE Apr 75/72.50 Put Spread

Tier 1: Enter at 0.36, Exit at 0.06

Tier 2: Enter at 0.51, Exit at 0.21

Tier 3: Enter at 0.66, Exit at 0.36

 

Trade #3: ETSY

ETSY had a great earnings report and the stock is gapping higher. This is a PEAD setup, where I expect the stock to drift higher over the next few months.

Trade Setup

Expected Price: 67.20

Sell to Open ETSY Apr 55/50 Put Spread

Tier 1: Enter at 0.55, Exit at 0.05

Tier 2: Enter at 0.85, Exit at 0.35

Tier 3: Enter at 1.15, Exit at 0.65

Disclaimer

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