IWO Trading Floor

Become a Great Options Trader

Proactive Spreads, December 3rd 2019 – LRCX, INTC, CAT

By

Market is taking a little downside heat on “trade war” headlines. Whatever that means.

We needed a pullback. From the Oct lows the S&P rallied 300 points without any kind of selling. Which is fine. My bet here is that there are a lot of dip buyers waiting on the sidelines… waiting for the SPX to retest the previous support level at 3030.

I think they’ll be disappointed. I know this because I want a retest of 3030 which means we won’t get it. Odds are the pullback will be shallow, rotational, and brief as buyers need to force their way in before the end of the year.

Trade #1: LRCX

The stock has tested its rising 50 day moving average, and the earnings open support is just underneath that. I like playing it long here.

Trade Setup
Expected Price: 257.5
Sell to Open LRCX Jan 225/220 Put Spread
Tier 1: Enter at 0.6, Exit at 0.07
Tier 2: Enter at 0.84, Exit at 0.13
Tier 3: Enter at 1.08, Exit at 0.1
Stop Out If Close Under 225

Trade #2: INTC

Looking for a similar structure as LRCX– pullback into major moving average support and the earnings reaction open.

Trade Setup

Expected Price: 54.68

Sell to Open INTC Jan 52.5/50 Put Spread

Tier 1: Enter at 0.51, Exit at 0.27

Tier 2: Enter at 0.714, Exit at 0.404

Tier 3: Enter at 0.918, Exit at 0.518

Stop Out If Close Under 50

Trade #3: CAT

I want to see a retest of the previous resistance, which should hold as potential support.

Trade Setup

Expected Price: 135

Sell to Open CAT Jan 125/120 Put Spread

Tier 1: Enter at 0.74, Exit at 0.22

Tier 2: Enter at 1.036, Exit at 0.356

Tier 3: Enter at 1.332, Exit at 0.412

Stop Out If Close Under 125

 

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