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Proactive Spreads, July 25th 2019 – TXN, GLD

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In Monday’s newsletter, I wrote:

the least satisfying conclusion would be a shallow pullback followed by a piddling rally higher. And because it’s the least satisfying, odds are that’s what we are going to get.

So far, that seems to be the kind of market we’re going to get. It’s a slow grind higher and very few pullbacks in individual stocks worth playing.

I do think that it’s a little “off” that the market volatility, both realized and implied, are so low. Yes, it’s summer trading, but we’re in th emiddle of earnings season and we’ve got Fed voodoo into next week. I don’t think this Fed event will be a quiet one, so ideally we’ll see volatility pick up to get us some better setups into August.

Trade Setup #1: TXN

The stock gapped higher after a good earnings report. Anytime a stock gaps hard into new highs on good earnings, that tends to create a positive drift in the stock. I like playing it here.

Trade Setup

Expected Price: 127

Sell to Open TXN Sep 120/115 Put Spread 

Tier 1: Enter at 0.90, Exit at 0.40

Tier 2: Enter at 1.20, Exit at 0.70

Tier 3: Enter at 1.50, Exit at 1.00

Trade Setup #2: GLD

I’d like to see a retest of the range lows at 130. That will coincide with the rising 50 day moving average.

Trade Setup

Expected Price: 130.40

Sell to Open GLD Sep 126/123 Put Spread

Tier 1: Enter at 0.39, Exit at 0.09

Tier 2: Enter at 0.59, Exit at 0.29

Tier 3: Enter at 0.79, Exit at 0.49

 

Disclaimer

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