OH LOOK THE MARKET IS WEEK AGAIN INTO OPTIONS EXPIRATION.
This is now the 5th month in a row where low liquidity combined with hedges burning off lead to some swift downside. We’ve been talking about a rug pull for a little while and how we need to allow more “wiggle room” to the downside. Which is what we will keep doing.
Note the expirations for each trade, the FB trade is Oct but the rest are in Nov.
Trade #1: FB
Facebook is having a case of the Mondays on Friday. Ideally we get some downside followthrough next week and we are targeting internal support first, and then larger support levels around 350.
Note the expiration– we’re using October options, and I believe this may include some earnings risk. Consider sizing down a bit, or closing size early before earnings.
Expected Price: 357.81
Sell to Open FB 15Oct21 340/335 Put Spread
Tier 1: Enter at 0.85, Exit at 0.14
Tier 2: Enter at 1.19, Exit at 0.42
Tier 3: Enter at 1.53, Exit at 0.55
Stop Out If Close Under 339.89
Trade #2: WDAY
I’m comfortable with WDAY here. It was a monster earnings gap, and any push into the earnings gap should get us some nice adds on the trade. If it completely fills the gap and then some, then we will stop out with a smile on our face.
Expected Price: 267
Sell to Open WDAY 19Nov21 240/230 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 239.89
Trade #3: X
Commodity stocks are getting taken to the woodshed right now, and steel is no exception. It’s been a crowded trade, and I’m not shocked that we’re running to the other end of the range after a failed breakout in August.
We’re going to use the internal pivot levels from Jun-Jul and the rising 200 day moving average to initiate a trade.
Expected Price: 22.61
Sell to Open X 19Nov21 20/18 Put Spread
Tier 1: Enter at 0.49, Exit at 0.23
Tier 2: Enter at 0.686, Exit at 0.41
Tier 3: Enter at 0.882, Exit at 0.56
Stop Out If Close Under 19.89