Before we get into the setups, some quick housekeeping…
Yesterday we had a live Proactive Spreads On-Ramp class, and it was a technological dumpster fire. Everything broke on me! And while we did have some great questions, I know from the numbers that many of you didn’t have the opportunity to join live because, again, everything broke.
My schedule is completely booked next week due to civic responsibilities (jury duty!), so we will have another On-Ramp class the Wednesday after that.
On to the markets…
Things look fine. That’s about as technical as we need to get right now. It’s still a grinding market, with some hot spots running, but still very rotational.
My main concern is that the next liquidity break will be so well telegraphed that it overshoots as eager dip buyers get absolutely smoked. We have established a clear pattern whereby the market will drop hard right around monthly options expiration, only to have a massive bounce afterwards. These are due to the low liquidity in the market and higher trade volumes in the options market, to the point where the “tail wags the dog.”
That’s not the most healthy market to have!
So for today’s setups, we’re going to focus on planning for a deeper drop. Sure, that may cause no trades to happen, but I would rather be sitting on my hands than trying to sell put spreads on the first decent downtick.
Trade #1: MDB
Absolutely monster move on earnings, and I think this has a sustainable range built into it. My bet here is that the earnings gap will not be fully filled due to the positive earnings drift. If it fills the gap, then I stop out with a smile on my face.
Trade Setup
Expected Price: 473
Sell to Open MDB 19Nov21 400/390 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 399.89
Trade #2: NVDA
One of the strongest movers in the market right now. I’m playing for a full retest of the breakout range.
Trade Setup
Expected Price: 201
Sell to Open NVDA 15Oct21 180/177.5 Put Spread
Tier 1: Enter at 0.37, Exit at 0.05
Tier 2: Enter at 0.52, Exit at 0.11
Tier 3: Enter at 0.67, Exit at 0.14
Stop Out If Close Under 179.89
Trade #3: ADSK
Autodesk had a nasty earnings event, and can’t seem to find a bid. It’s holding support from the pivot level in July, yet I want to see one more big push down to 270 to play it.
Trade Setup
Expected Price: 269
Sell to Open ADSK 15Oct21 250/240 Put Spread
Tier 1: Enter at 1.5, Exit at 0.05
Tier 2: Enter at 2.1, Exit at 0.52
Tier 3: Enter at 2.7, Exit at 0.65
Stop Out If Close Under 249.89