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Proactive Spreads, April 22nd 2019 – DIS, UNP, IBM

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Markets continue to chop right around highs. Several very large companies report earnings, and if they move the market will respond in kind.

(Looking at you, Apple.)

The all time highs are being closely followed by all market participants. I’m in the camp that for the market to be constructive, you need a pullback from highs before a breakout. If the market jams to 3000 without any kind of selling pressure, then I’ll start looking at aggressive short trades.

Trade #1: DIS

DIS had a massive gap higher on news that they are rolling out their streaming service. This is on the back of  a massive, multi-year range that the stock has been trading in.

When a stock gaps to new all time highs with a fundamental catalyst behind it, the odds of trend continuation are very high and that’s what I want to play.

Trade Setup

Expected Price: 131.50

Sell to Open DIS 21Jun19 125/120 Put Spread

Tier 1: Enter at 0.82, Exit at 0.12

Tier 2: Enter at 1.12, Exit at 0.42

No Tier 3 (Earnings)

Trade #2: UNP

Very similar theme here– the stock is gapping higher to new highs on the back of fundamental news (earnings). This has high odds of trend continuation.

Trade Setup

Expected Price: 177.72

Sell to Open UNP 21Jun19 165/160 Put Spread

Tier 1: Enter at 0.54, Exit at 0.04

Tier 2: Enter at 0.84, Exit at 0.14

Tier 3: Enter at 1.14, Exit at 0.44

Trade #3: IBM

Looking for a test of the gap from last quarter.

Trade Setup

Expected Price: 132

Sell to Open IBM 21Jun19 125/120 Put Spread

Tier 1: Enter at 0.77, Exit at 0.07

Tier 2: Enter at 1.07, Exit at 0.37

Tier 3: Enter at 1.37, Exit at 0.67

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