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Proactive Spreads, August 1st 2019 – MU, MSFT, GS

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Buy the rumor, sell the news. After the announcement of the Fed rate cut that everyone and their grandmother knew about… stocks sold off.

We’ve seen this before…

In this case, it doesn’t seem to be enough to move the needle. Crude oil is back under 55 and the dollar is at highs relative to nearly everything out there.

It’s not world-ending action. It’s pretty normal– markets have been fairly quiet for the past few months so a little more volatility is welcome.

With that pickup in volatility, it’s useful to widen out your expected prices. Don’t use the past month’s price action as a guide for the future, because that was during a fairly quiet period.

Trade #1: MU

I want to see a fill of the gap from July 7th. The rising 50 day moving average will provide support just underneath it as well.

Trade Setup

Expected Price: 41.35

Sell to Open MU Sep 36/34 Put Spread

Tier 1: Enter at 0.32, Exit at 0.02

Tier 2: Enter at 0.44, Exit at 0.22

Tier 3: Enter at 0.56, Exit at 0.34

Trade #2: MSFT

I’ve been waiting for MSFT to finally catch some selling. I want to see a retest of the previous breakout level (or just above it).

Trade Setup

Expected Price: 132.57

Sell to Open MSFT Sep 125/120 Put Spread

Tier 1: Enter at 0.80, Exit at 0.30

Tier 2: Enter at 1.10, Exit at 0.60

Tier 3: Enter at 1.40, Exit at 0.90

Trade #3: GS

Nasty selloff today. Looking for followthrough to the gap open and the rising 50 day moving average.

Trade Setup

Expected Price: 203.33

Sell to Open GS Sep 185/180 Put Spread

Tier 1: Enter at 0.70, Exit at 0.20

Tier 2: Enter at 1.00, Exit at 0.50

Tier 3: Enter at 1.30, Exit at 0.80

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