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Proactive Spreads, April 13th, 2021 – QQQ, TGT, IBB

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I’ve mentioned this previously, but this kind of market environment is not my favorite to trade. Indices are running hot, all my stocks are headed into earnings soon, and the potential setups that I have simply start to dry up until we see a proper rotation lower.

And here’s the thing– we don’t need a pullback for setups to start showing up, it is the event risk on these stocks into earnings season. If, for example, JPM reports good numbers and has a gap and go above 160, I absolutely will look to sell put spreads. It just requires a bit more time to get some better setups.

Today, we’ll focus on fading the Q’s, planning a pullback in a retail stock that has earnings out of the way, and look for a stop run in biotech.

Trade #1: QQQ

This is straightforward. The Nasdaq 100 is overbought as many large cap tech stocks are seeing pre-earnings runs. I think much of the good news is getting priced in, and that we can see some profit taking before names like GOOGL and AAPL report at the end of the month.

Trade Setup

Expected Price: 340.7

Sell to Open QQQ 21May21 352/355 Call Spread

Tier 1: Enter at 0.9, Exit at 0.54

Tier 2: Enter at 1.26, Exit at 0.91

Tier 3: Enter at 1.62, Exit at 1.23

Stop Out If Close Over 352.11

Trade #2: TGT

I am looking for a test of the most recent pivot levels… just underneath that to get a stop run going on. That level, depending on how long it takes, will line up with either the 20 or 50 day moving average, along with the anchored VWAP from the most recent swing lows.

Trade Setup

Expected Price: 194

Sell to Open TGT 18Jun21 185/180 Put Spread

Tier 1: Enter at 1.25, Exit at 0.61

Tier 2: Enter at 1.75, Exit at 1.1

Tier 3: Enter at 2.25, Exit at 1.48

Stop Out If Close Under 184.89

Trade #3: IBB

I’m not sure we’ll get a fill on this one as biotech looks like it could play catchup here.

But if it doesn’t… this is the third time IBB has held the 200 day moving average, and if it loses it again we’ll probably see a push to retrace the most recent rally. Into that I want to be prepared and get long.

Trade Setup

Expected Price: 140

Sell to Open IBB 18Jun21 132/130 Put Spread

Tier 1: Enter at 0.45, Exit at 0.18

Tier 2: Enter at 0.63, Exit at 0.35

Tier 3: Enter at 0.81, Exit at 0.47

Stop Out If Close Under 131.89

Disclaimer

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