• 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 23rd, 2020 – HD, WMT, PTON

November 23, 2020 By Steven Place

First off, let’s keep things simple again…

The burden of proof is on the bearish case. Unless the S&P can crack 3500 and find some followthrough, then we must assume trend continuation.

Yet within this rally, we have seen a strong rotation underneath the surface. Mega-cap tech hasn’t participated in this move, and smallcaps have been on an absolute tear.

For me, this makes sense. There areas in the market that have been suppressed due to lockdowns and the lack of fiscal support. Now it seems those narratives are starting to fade and some names are playing catchup– see Macy’s (M) and Boeing (BA) as some examples of stocks who had a “relief valve” move over the past month.

The primary risk in the market is the lack of a fiscal deal from the US. We’ve seen many times in the past that the market will throw a tantrum if it lacks fiscal or monetary support volatility will pick up. See the fiscal cliff in 2011 and the taper tantrum in 2016 as good examples.

And that’s about it in terms of primary narratives surrounding the markets. I have a hard time believing that it will be an issue in the near term as market participants are still buying hedges with a VIX in the 20s. We’re coming into the holiday season which tends to have lower volume, liquidity, and volatility… perhaps we won’t see any good downturns until we get those hedges burned off.

Primary setups here will anticipate that the rotation we’ve been seeing will continue. Ideally we get some rug-pulls in some names for good entries, and I’ll still be looking for a short in some of these lockdown names.

Trade #1: HD

HD is not getting up off the mat, in spite of the moves the rest of the market has been seeing. It may be a touch more sensitive to rates, and if rates spike on a fiscal deal then it becomes less attractive to own at this particular yield.

I’m looking for a test of the lower end of the range as the long term averages start to support price.

Trade Setup

Expected Price: 262.66

Sell to Open HD 18Dec20 250/247.5 Put Spread

Tier 1: Enter at 0.42, Exit at 0.06

Tier 2: Enter at 0.588, Exit at 0.19

Tier 3: Enter at 0.756, Exit at 0.26

Stop Out If Close Under 249.89

Trade #2: WMT

WMT has had a nice run, but it’s similar to HD– rate sensitive and we could see a nice push into 146 to start scaling into a setup.

Trade Setup

Expected Price: 146.23

Sell to Open WMT 18Dec20 140/137 Put Spread

Tier 1: Enter at 0.45, Exit at 0.01

Tier 2: Enter at 0.63, Exit at 0.15

Tier 3: Enter at 0.81, Exit at 0.19

Stop Out If Close Under 139.89

Trade #3: PTON

I think this our second attempt to short PTON. Look for some good sales numbers to come out and jam the stock into the earnings gap fill– that will be a good place to initiate a short.

Trade Setup

Expected Price: 121.44

Sell to Open PTON 18Dec20 140/145 Call Spread

Tier 1: Enter at 0.7, Exit at 0.04

Tier 2: Enter at 0.98, Exit at 0.17

Tier 3: Enter at 1.26, Exit at 0.21

Stop Out If Close Over 140.11

 

 

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

Primary Sidebar

© 2021 Global Profit Systems International