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Proactive Spreads, September 23rd - GLD, CRM, LULU

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Markets are still soft this week and are recovering from the parabolic run we had last month.

We're coming into a giant wall of uncertainty. Yes, you've got US elections but the news the market is focused in on is a fiscal package that hasn't been passed yet. We've seen "tantrums" like this before, where if buyers aren't enticed enough, they won't step in at the margins to support price action.

Contrast that with the amount of hedges that are still on. The October VIX futures traded up at 40 at the beginning of the month and we are nowhere near that level right now.

If everyone is hedged, then it becomes difficult for price to sustain any protracted selloff.

And that leaves us with the idea we've had for a while now-- the market got a little overheated and is establishing a new trading range... probably into the end of the year.

Trade #1: CRM

This is still on the table-- we want the half-gap as the first support level to work with.  We've watched that level for a while now and if tech stays weak, then we will finally have the opportunity.

Trade Setup

Expected Price: 231.8

Sell to Open CRM 16Oct20 220/210 Put Spread

Tier 1: Enter at 2, Exit at 0.64

Tier 2: Enter at 2.8, Exit at 1.36

Tier 3: Enter at 3.6, Exit at 1.8

Stop Out If Close Under 219.89

Trade #2: GLD

Gold is getting hit as "king dollar" runs higher. The dollar move is most likely tied with the "tantrum" the market is having over fiscal stimulus. As it comes into the previous breakout area we want to start scaling into a long position.

Trade Setup

Expected Price: 175.07

Sell to Open GLD 16Oct20 168/165 Put Spread

Tier 1: Enter at 0.4, Exit at 0.05

Tier 2: Enter at 0.56, Exit at 0.07

Tier 3: Enter at 0.72, Exit at 0.08

Stop Out If Close Under 167.89

Trade #3: LULU

LULU had a massive move yesterday and it appears as though the reversal is going to hold. Odds are it will start to knock out a range, and I like playing it into the key pivot level at 309.

Trade Setup

Expected Price: 309.21

Sell to Open GLD 16Oct20 280/275 Put Spread

Tier 1: Enter at 0.8, Exit at 0.08

Tier 2: Enter at 1.12, Exit at 0.34

Tier 3: Enter at 1.44, Exit at 0.44

Stop Out If Close Under 279.89

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