• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

IWO Trading Floor

Become a Great Options Trader

  • Customer Center

Full Time Profits, November 12th, 2020 – UBER, LRCX, GOOGL

November 12, 2020 By Steven Place

When the markets saw that massive gap higher on Monday, it was sold for the entire day. 

Normally, when we see a range breakout that fails, there is a tendency for price to trade down into the other end of the range… that would be 3200 on the SPX.

I’m not sure we will easily see that. We might, eventually, but odds are it won’t be a “hot knife through butter” kind of move. 

I’ve been wrong on that one before, and I’ll talk about the primary risk in a moment, but first let’s think of the risks that are getting cleared out.

First, the elections. Unless something truly comes out of nowhere, the presidential election is done, and that can get priced into the market fairly quickly. 

There’s a senate runoff in Georgia that markets may start focusing on. Remember– markets have a tendency to attach a narrative to price action only after the move has started. See the selloff in ZM and how it happened before the vaccine news came out.

But that’s a ways off, and we’ve got other near term risks the market is currently focusing on.

The next risk is going to be in a fiscal deal… if it ever gets done. 

We’ve seen plenty of times in the past where the stock market will throw a “temper tantrum” in response to a lack of fiscal or monetary policy. Oct-Dec 2018 come to mind, as does the “taper tantrum” in 2016.

The longer we go on without any fiscal stimulus, the higher the odds that vol will continue to pick up.

Third risk is the disease-that-shall-not-be-named. You know the one, and I’m trying to not say the name so this note can reach your inbox easily.

The ‘rona is in a family of viruses that exhibit a clear seasonality, and this has been known for a while. It’s not a surprise that cases are starting to pick up in Europe and the Northern US.

We’re now seeing policy responses to that increase in aggression. NY state is now telling people to keep fewer than 10 people indoors. Chicago is asking folks to cancel their thanksgiving plans.

If the lockdowns increase, then that will combine with the lack of fiscal stimulus and can create a “tantrum.” That’s how we can see hot-knife-through-butter price action.

Have I got you good and scared yet? 

Here’s the good news. 

All the election hedges that investors put on are still on. That means downside can be capped as these hedgers start to unwind their positions into any further selling. When that happens it can create a natural floor in the market as we go back into balance.

Clear as mud, right? That’s pretty normal.

Current focus is the first quality pullback in relative strength names. 

Trade #1: UBER

UBER had a monster run post earnings that was punctuated by a blowoff top on Monday. I’m looking for a full gap fill from Friday’s close as a place to start a position.

Trade Setup

Expected Price: 44.53

Sell to Open UBER 18Dec20 40/37 Put Spread

Tier 1: Enter at 0.47, Exit at 0.03

Tier 2: Enter at 0.658, Exit at 0.18

Tier 3: Enter at 0.846, Exit at 0.23

Stop Out If Close Under 39.89

 

Trade #2: LRCX

Along with the rest of the semiconductor space, Lam had a nice move higher. We’ve got a gap fill and previous resistance in the 380s as a place to start from. This one is a little less liquid, so please double check prices as we come into that level.

Trade Setup

Expected Price: 383

Sell to Open LRCX 18Dec20 350/345 Put Spread

Tier 1: Enter at 1.15, Exit at 0.49

Tier 2: Enter at 1.61, Exit at 0.93

Tier 3: Enter at 2.07, Exit at 1.24

Stop Out If Close Under 349.89

Trade #3: GOOGL

This setup in GOOGL is probably wishful thinking, but I’m looking for a test of the earnings high and the rising 20 day moving average.

Trade Setup

Expected Price: 1660

Sell to Open GOOGL 18Dec20 1520/1510 Put Spread

Tier 1: Enter at 1.75, Exit at 0.34

Tier 2: Enter at 2.45, Exit at 0.94

Tier 3: Enter at 3.15, Exit at 1.23

Stop Out If Close Under 1520.89

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

Primary Sidebar

© 2021 Global Profit Systems International