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Proactive Spreads, January 5th, 2021 – GLD, ATVI, PENN

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The S&P had another rug pull on Monday– great way to start the new year!

Overall, things are “fine.” The only major warning sign was the fact that Monday’s range was more than a 2 standard deviation move– when there are volatility pivots like that, there is a tendency for the “impulse” low to not be the final low. We could easily crack 3650, get a bunch of investors spooked, and start carving out the lower end of a range-based correction.

Or we could continue with the Q4 2020 playbook and it can be a one-off event as we jam to new highs.

For today, our focus will be planning for a few things.

First, we want to be ready for the dollar to hit a cycle low. It’s extended, and any pop should lead to some reversion in commodities. We’ll also be looking for rug pulls in two tech/momentum names.

Trade #1: GLD

Trade Setup

Expected Price: 180.38

Sell to Open GLD 19Feb21 172/169 Put Spread

Tier 1: Enter at 0.56, Exit at 0.14

Tier 2: Enter at 0.784, Exit at 0.33

Tier 3: Enter at 1.008, Exit at 0.44

Stop Out If Close Under 171.89

Trade #2: ATVI

Looking for a pull to the 20 day moving average, prior resistance, and support from the candlestick wicks from 2 weeks ago.

Trade Setup

Expected Price: 88.25

Sell to Open ATVI 19Feb21 80/77.5 Put Spread

Tier 1: Enter at 0.43, Exit at 0.07

Tier 2: Enter at 0.602, Exit at 0.22

Tier 3: Enter at 0.774, Exit at 0.28

Stop Out If Close Under 79.89

Trade #3: PENN

Looking for just a little bit more downside here. I may have missed the short term bottom, but if it goes on one last stop run to attempt a test of prior resistance, I want to be involved.

Trade Setup

Expected Price: 78.5

Sell to Open PENN 19Feb21 70/65 Put Spread

Tier 1: Enter at 1.05, Exit at 0.37

Tier 2: Enter at 1.47, Exit at 0.76

Tier 3: Enter at 1.89, Exit at 1.01

Stop Out If Close Under 69.89

Disclaimer

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