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Proactive Spreads, April 30th, 2019 – GOOGL, XLNX, MSFT

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Markets are hovering right underneath all time highs and it appears that we’re going to breakout.

Right now, this is a market of stocks, not a stock market. Software companies helped to lead the market out of the hole at the beginning of the year, and we’re now on the backend of earnings season which looked pretty good.

You’re seeing positive reactions by MSFT (now a $1T company) and AAPL… and because the indexes are market-cap weighted, these stocks are making up for the last third of this move.

It’s very possible that the behavior of market participants needs to shift before we can top out. The past few months have been a low volatility grind higher simply because there has been a lack of inventory to sell. Maybe if volumes pick up we’ll see more people get invested in the market and then it finally leads to two-way action.

Or it’s wishful thinking. I’d love more vol and reversion and ACTUAL MARKET DIPS but that is not what the tape is giving us.

Trade #1: MSFT

Looking for a half gap fill.

Trade Setup

Expected Price: 127.50

Sell to Open MSFT Jun 120/115 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: XLNX

One of the darlings of the semiconductor industry took a major hit on earnings. This is after a quarter ago where the stock ran from 90 to 110 in 3 days. I think it’s possible the stock can back and fill here, but odds are it will establish a new trading range.

Trade Setup

Expected Price: 120

Sell to Open XLNX Jun 110/105 Put Spread

Tier 1: Enter at 0.84, Exit at 0.34

Tier 2: Enter at 1.14, Exit at 0.64

Tier 3: Enter at 1.44, Exit at 0.94

Trade #3: GOOGL

I expect this post-earnings gap will hold.

Trade Setup

Expected Price: 1198.96

Sell to Open GOOGL 1115/1110 Put Spread

Tier 1: Enter at 0.65 Exit at 0.15

Tier 2: Enter at 0.95, Exit at 0.45

Tier 3: Enter at 1.25, Exit at 0.75

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