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Proactive Spreads, March 18th, 2019 – CSCO, AAPL, FB

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The S&P 500 is holding the 2800 level.

Over the past few newsletters, I’ve talked about the difference in price acceptance at 2800 compared to price rejection late in 2018. When price is accepted, it’s reasonable to assume that markets will continue to auction in the direction of the trend.

That’s basically it. There’s not much further analysis to do here. We’ve got the Fed on Wednesday that could throw a wrench in things, but so far markets are shaping up to stay in a low volatility grind higher.

Any corrections will be rotational in nature. That means intermarket correlations will be low– you can get away with buying the dip and shorting individual stocks based off their own merits instead of needing to obsess over the broad markets.

Trade #1: CSCO

This is the second attempt to play CSCO long. The first was a potential retest of 50, and that didn’t happen. Now I’m interested in playing the retest of the most recent resistance levels.

Trade Setup

Expected Price: 52

Sell to Open CSCO May 49/47 Put Spread

Tier 1: Enter at 0.35, Exit at 0.05

Tier 2: Enter at 0.45, Exit at 0.15

Tier 3: Enter at 0.55, Exit at 0.25

Trade #2: AAPL

AAPL is starting to get short term overbought and is going to attempt to come into levels that should offer solid resistance. I like fading this stock at the gap fill from Nov 16th.

Trade Setup

Expected Price: 193.50

Sell to Open AAPL May 200/205 CallSpread

Tier 1: Enter at 0.95, Exit at 0.45

Tier 2: Enter at 1.25, Exit at 0.75

Tier 3: Enter at 1.55, Exit at 1.05

Trade #3: FB

This is the second attempt to play it long, and we need to shift option strikes to get a better fill. That line on my chart has been there for a full month and we’re finally getting the test of the half gap fill from earnings.

Trade Setup

Expected Price: 158.24

Sell to Open FB May 140/135 Put Spread

Tier 1: Enter at 0.75, Exit at 0.25

Tier 2: Enter at 1.05, Exit at 0.55

Tier 3: Enter at 1.35, Exit at 0.85

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