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Proactive Spreads, September 17th, 2021 – FB, WDAY, X

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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.

Trade Setup

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.

Trade Setup

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.

Trade Setup

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

Disclaimer

U.S. GOVERNMENT REQUIRED DISCLAIMER – COMMODITY FUTURES TRADING COMMISSION. FUTURES AND OPTIONS TRADING HAS LARGE POTENTIAL REWARDS, BUT ALSO LARGE POTENTIAL RISK. YOU MUST BE AWARE OF THE RISKS AND BE WILLING TO ACCEPT THEM IN ORDER TO INVEST IN THE FUTURES AND OPTIONS MARKETS. DON’T TRADE WITH MONEY YOU CAN’T AFFORD TO LOSE. THIS WEBSITE IS NEITHER A SOLICITATION NOR AN OFFER TO BUY/SELL FUTURES OR OPTIONS. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE DISCUSSED ON THIS WEBSITE. THE PAST PERFORMANCE OF ANY TRADING SYSTEM OR METHODOLOGY IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY, SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN