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Proactive Spreads, August 3rd, 2020 – CMI, FB, QQQ

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Markets continue to march higher on the back of tech earnings.

And that’s about it– we don’t want to overthink this too much. Unless the Nasdaq 100 breaks support or the S&P loses 3200, then we must assume the trend will continue. Market vol continues to decrease, which makes a VIX of 25 VERY expensive. When so many are overhedged with expensive protection, it becomes very difficult for the market to rollover.

Trade #1: CMI

Looking for a pull into key pivot support and a rising 20 day moving average.

Trade Setup

Expected Price: 188.09

Sell to Open CMI 18Sep20 170/165 Put Spread

Tier 1: Enter at 0.65, Exit at 0.04

Tier 2: Enter at 0.91, Exit at 0.09

Tier 3: Enter at 1.17, Exit at 0.13

Stop Out If Close Under 169.89

Trade #2: FB

FB gapped up to new highs, but isn’t seeing much followthrough. If tech gets week, I want to play it on the half gap fill and start scaling in.

Trade Setup

Expected Price: 245.16

Sell to Open FB 21Aug20 230/227.5 Put Spread

Tier 1: Enter at 0.42, Exit at 0.06

Tier 2: Enter at 0.588, Exit at 0.198

Tier 3: Enter at 0.756, Exit at 0.266

Stop Out If Close Under 229.89

Trade #3: QQQ

Just in case large cap tech decides to jam higher this week, I want to play short into the first weekly pivot resistance.

Trade Setup

Expected Price: 273.98

Sell to Open QQQ 21Aug20 283/286 Call Spread

Tier 1: Enter at 0.7, Exit at 0.3

Tier 2: Enter at 0.98, Exit at 0.57

Tier 3: Enter at 1.26, Exit at 0.77

Stop Out If Close Over 283.11

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