{"id":15615,"date":"2020-10-28T14:30:15","date_gmt":"2020-10-28T18:30:15","guid":{"rendered":"https:\/\/trades.iwopremium.com\/?p=15615"},"modified":"2020-11-17T14:33:45","modified_gmt":"2020-11-17T18:33:45","slug":"proactive-spreads-october-28th-2020-nke-zm-unp","status":"publish","type":"post","link":"https:\/\/trades.iwopremium.com\/proactive-spreads-october-28th-2020-nke-zm-unp\/","title":{"rendered":"Full Time Profits, October 28th, 2020 – NKE, ZM, UNP"},"content":{"rendered":"

\"\"<\/p>\n

I came into this week thinking that the market was experiencing a pretty tame pullback.<\/p>\n

I was thinking that the “tameness” was evidence for a continuation higher. After all, if someone needed to sell or hedge before the election, then they probably have already.<\/p>\n

So much for that idea. We are seeing a strong continuation to the downside as Europe locks down for round two of the virus that shall not be named.<\/p>\n

(I try to not call it out so the big tech filters will let this communication through.)<\/p>\n

Where do we stand now?<\/p>\n

Back to the original thesis we had in August– the markets had gone parabolic and were going to knock out a trading range that would chop everyone up to death. It’s working pretty well!<\/p>\n

Into this most recent move lower, the VIX pushed into 40. A VIX of 40 is usually a very, very bad thing… but remember that the options market is attempting to price in risk surrounding 3 things:<\/p>\n

    \n
  1. Election<\/li>\n
  2. Fiscal Deal<\/li>\n
  3. The Virus that shall not be named<\/li>\n<\/ol>\n

    Risk 1 is pretty easy to figure out because the risk goes away in about a week. Risk 2 is harder simply because it’s politics, and it’s always messy. Risk 3 should get priced in about a month, if the numbers out of Europe follow the Gompertz curve that we saw in the Sunbelt case spike.<\/p>\n

    Oh, and I forgot to mention risk 4: earnings.<\/p>\n

    You’ve got 4 stocks: FB, GOOGL, AAPL, and AMZN that all report on the exact same day. That’s 50% of the Nasdaq market cap that could move big.<\/p>\n

    Right now, the best strategy is to take advantage of the elevated risk premia as it’s starting to generate a pretty good edge for us.<\/p>\n

    Trade #1: NKE<\/h2>\n

    \"\"<\/p>\n

    NKE is starting to pullback into its rising 50 day moving average and the first earnings pivot low. If it comes back to previous resistance then I want to be involved.<\/p>\n

    Trade Setup<\/strong><\/p>\n

    Expected Price: 120.11<\/p>\n

    Sell to Open NKE 20Nov20 110\/105 Put Spread<\/strong><\/p>\n

    Tier 1: Enter at 0.65, Exit at 0.09<\/p>\n

    Tier 2: Enter at 0.91, Exit at 0.09<\/p>\n

    Tier 3: Enter at 1.17, Exit at 0.09<\/p>\n

    Stop Out If Close Under 109.89<\/p>\n

    Trade #2: ZM<\/h2>\n

    \"\"<\/p>\n

    Looking for the first test of the previous range lows.<\/p>\n

    Trade Setup<\/strong><\/p>\n

    Expected Price: 469.09<\/p>\n

    Sell to Open ZM 20Nov20 420\/410 Put Spread<\/strong><\/p>\n

    Tier 1: Enter at 1.8, Exit at 0.4<\/p>\n

    Tier 2: Enter at 2.52, Exit at 1.02<\/p>\n

    Tier 3: Enter at 3.24, Exit at 1.34<\/p>\n

    Stop Out If Close Under 419.89<\/p>\n

    Spread Value before gap down:<\/p>\n

    \"\"<\/p>\n

    Trade #3: UNP<\/h2>\n

    \"\"<\/p>\n

    UNP is oversold enough to justify a long here. It’s deeply oversold on a 2 week basis, and is coming back to the summer trading range. I’m not sure this is the exact bottom but it’s pretty close.<\/p>\n

    Trade Setup<\/strong><\/p>\n

    Expected Price: 174.58<\/p>\n

    Sell to Open UNP 20Nov20 160\/155 Put Spread<\/strong><\/p>\n

    Tier 1: Enter at 0.74, Exit at 0.01<\/p>\n

    Tier 2: Enter at 1.036, Exit at 0.236<\/p>\n

    Tier 3: Enter at 1.332, Exit at 0.302<\/p>\n

    Stop Out If Close Under 159.89<\/p>\n","protected":false},"excerpt":{"rendered":"

    I came into this week thinking that the market was experiencing a pretty tame pullback. I was thinking that the “tameness” was evidence for a continuation higher. After all, if someone needed to sell or hedge before the election, then they probably have already. So much for that idea. We are seeing a strong continuation […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_bbp_topic_count":0,"_bbp_reply_count":0,"_bbp_total_topic_count":0,"_bbp_total_reply_count":0,"_bbp_voice_count":0,"_bbp_anonymous_reply_count":0,"_bbp_topic_count_hidden":0,"_bbp_reply_count_hidden":0,"_bbp_forum_subforum_count":0,"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":""},"categories":[24,1],"tags":[],"_links":{"self":[{"href":"https:\/\/trades.iwopremium.com\/wp-json\/wp\/v2\/posts\/15615"}],"collection":[{"href":"https:\/\/trades.iwopremium.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/trades.iwopremium.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/trades.iwopremium.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/trades.iwopremium.com\/wp-json\/wp\/v2\/comments?post=15615"}],"version-history":[{"count":3,"href":"https:\/\/trades.iwopremium.com\/wp-json\/wp\/v2\/posts\/15615\/revisions"}],"predecessor-version":[{"id":15708,"href":"https:\/\/trades.iwopremium.com\/wp-json\/wp\/v2\/posts\/15615\/revisions\/15708"}],"wp:attachment":[{"href":"https:\/\/trades.iwopremium.com\/wp-json\/wp\/v2\/media?parent=15615"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/trades.iwopremium.com\/wp-json\/wp\/v2\/categories?post=15615"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/trades.iwopremium.com\/wp-json\/wp\/v2\/tags?post=15615"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}