Update: January 14th, 2020
Adding risk on a different expiration.
Update: February 1st, 2021
Rolling the highest strike put to cut risk.
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By Steven Place
By Steven Place
By Steven Place
Stocks have seen a pretty good run over the past month, but we are starting to see signs of… not sellers, but a lack of buyers.
Look, we’re coming into the end of the year, and if institutions wanted to chase prices higher, they probably have already. It’s the last full week of the year and I expect pullbacks to be shallow.
WMT has come into a level I’ve been watching for a couple weeks now. You’ve got the rising 50 day moving average, previous price support, and a trendline support that is catching up to price. After a clean move from all time highs, I’m looking for buyers to step up again.
Trade Setup
Expected Price: 146.06
Sell to Open WMT 15Jan21 140/135 Put Spread
Tier 1: Enter at 0.83, Exit at 0.12
Tier 2: Enter at 1.162, Exit at 0.39
Tier 3: Enter at 1.494, Exit at 0.5
Stop Out If Close Under 139.89
This sucker is overbought 10 ways to Sunday, and while I don’t like it short here, I do want to anticipate the first rug pull. It’s been a while since the stock has had one, and it needs it. I’m targeting the previous pivot resistance level, along with the rising 20 day moving average that should catch up here pretty soon.
(And if you wanted it short, I’m looking for 345 then 360.)
Trade Setup
Expected Price: 291
Sell to Open ROKU 15Jan21 245/240 Put Spread
Tier 1: Enter at 0.82, Exit at 0.1
Tier 2: Enter at 1.148, Exit at 0.36
Tier 3: Enter at 1.476, Exit at 0.48
Stop Out If Close Under 244.89
Still a clear winner this quarter. Financials are week and we can see a little bit more of a rollover, yet into the previous range is where I want to be involved.
These options will include earnings– the report is the day of opex. So if the stock is close to our strike price we will bail before the earnings event to avoid any of that risk.
Trade Setup
Expected Price: 116.56
Sell to Open JPM 15Jan21 110/105 Put Spread
Tier 1: Enter at 1.03, Exit at 0.35
Tier 2: Enter at 1.442, Exit at 0.72
Tier 3: Enter at 1.854, Exit at 0.96
Stop Out If Close Under 104.89
By Steven Place
By Steven Place
That was about as textbook of a pullback as you can get. The market had a shakeout yesterday and a gap down today that looked as though it could have followthrough, but was met with very aggressive buyers.
I still maintain the idea that any corrections will be rotational in nature, and most likely sideways. With the VIX still above 20, it’s difficult to find followthrough due to hedgers closing out positions into selloffs. And I have this sneaking suspicion that institutions are still caught on the wrong foot, underexposed in equities.
If overall market gets too stretched, we can be more aggressively short- see our recent trade in SMH as an example. But for now we will stick with our bread-and-butter setup.
The breakout attempt yesterday failed… but we didn’t see a ton of downside followthrough. Instead, we had a bullish piercing pattern and the stock went back into this week’s range. There is still plenty of demand into any pushes lower, and I think we can take advantage of that.
Trade Setup
Expected Price: 123.24
Sell to Open AAPL 15Jan21 112.5/110 Put Spread
Tier 1: Enter at 0.38, Exit at 0.01
Tier 2: Enter at 0.532, Exit at 0.13
Tier 3: Enter at 0.684, Exit at 0.17
Stop Out If Close Under 112.39
TWTR caught some heat today on news that they’re integrating with SNAP. I’ve long believed that TWTR has been a “clown car in a gold mine” and if they executed properly they could unlock much more value. I’m buying the strength here and will add to the spreads on further pullbacks.
Trade Setup
Expected Price: 51.21
Sell to Open TWTR 15Jan21 46/43 Put Spread
Tier 1: Enter at 0.48, Exit at 0.05
Tier 2: Enter at 0.672, Exit at 0.2
Tier 3: Enter at 0.864, Exit at 0.26
Stop Out If Close Under 45.89
This is a “stretch” trade, meaning we may not see that upside price target. But just in case, I want to be ready. 47 is a massive level and if we see a test of it without any consolidation first, it’s an easy fade to take.
Trade Setup
Expected Price: 47
Sell to Open XOM 15Jan21 50/52.5 Call Spread
Tier 1: Enter at 0.45, Exit at 0.1
Tier 2: Enter at 0.63, Exit at 0.25
Tier 3: Enter at 0.81, Exit at 0.33
Stop Out If Close Over 50.11
By Steven Place