{"id":7728,"date":"2017-03-09T14:30:56","date_gmt":"2017-03-09T18:30:56","guid":{"rendered":"https:\/\/trades.iwopremium.com\/?p=7728"},"modified":"2017-03-09T14:30:56","modified_gmt":"2017-03-09T18:30:56","slug":"proactive-spreads-march-9th-2017-vmw-tlt","status":"publish","type":"post","link":"https:\/\/trades.iwopremium.com\/proactive-spreads-march-9th-2017-vmw-tlt\/","title":{"rendered":"Full Time Profits, March 9th 2017 – VMW, TLT"},"content":{"rendered":"

\"\"<\/p>\n

We’re going to start off today’s newsletter with a look at Crude Oil.<\/p>\n

It sold off over 5% on the day, which was an incredibly strong move relative to the low volatility the asset has seen.<\/p>\n

We can measure this by looking at the lower indicator. It was over a 4 standard deviation move to the downside.<\/p>\n

When we have moves like this, they are often volatility pivots– meaning they are rarely one-off events. It also means that this volatility can start to spill over into other assets… like bonds, and stocks.<\/p>\n

Maybe it’s wishful thinking– I make my money when the market is moving at a faster click than what we’ve been seeing all year!<\/p>\n

The big narrative that is coming into play is the Fed rate hike. Rate-sensitive stocks such as utilities and commercial real estate are getting hit, and the commodity comeback story has been put on hold…again.<\/p>\n

Trade #1: VMW<\/h1>\n

\"\"<\/p>\n

This is a pb2ma setup– looking for a pullback into the 50 day moving average, which coincides with the support level from the most recent earnings move.<\/p>\n

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

Expected Price: 86<\/p>\n

Sell to Open Apr 82.50\/80 Put Spread<\/strong><\/p>\n

Tier 1: Enter at 0.33, Exit at 0.10<\/p>\n

Tier 2: Enter at 0.48, Exit at 0.33<\/p>\n

Tier 3: Enter at 0.63, Exit at 0.48<\/p>\n

Trade #2: TLT<\/h1>\n

\"\"<\/p>\n

Bonds are selling off in anticipation of another Fed rate hike this month.<\/p>\n

There’s a few things I’m taking into consideration here.<\/p>\n

First is the trading range TLT has been in since October. The highs are 123, lows are 116, so about a 7 point trading range. Extrapolating that down that gives an expected move to 109. Now does that have to happen all at once? No, but it’s a good starting point to work with.<\/p>\n

The second thing to watch is the TurningPoint indicator on the lower bound.<\/p>\n

Now we know that the historical standard deviation is 3.8%, so a two standard deviation move in a 20 day period is right around 7.6%.<\/p>\n

If we use the pre-gap highs at 121.74, that means a two standard deviation move would be down to 112.50.<\/p>\n

So those are our two points to start with– initializing new put spreads starting at 112 down to 109. We have two things going for this trade– a statistical backdrop as well as a clear technical pattern.<\/p>\n

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

Expected Price: 112<\/p>\n

Sell to Open May 106\/103 Put Spread<\/strong><\/p>\n

Tier 1: Enter at 0.30, Close at 0.05<\/p>\n

Tier 2: Enter at 0.50, Close at 0.30<\/p>\n

Tier 3: Enter at 0.80, Close at 0.50<\/p>\n","protected":false},"excerpt":{"rendered":"

We’re going to start off today’s newsletter with a look at Crude Oil. It sold off over 5% on the day, which was an incredibly strong move relative to the low volatility the asset has seen. We can measure this by looking at the lower indicator. It was over a 4 standard deviation move to […]<\/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],"tags":[],"_links":{"self":[{"href":"https:\/\/trades.iwopremium.com\/wp-json\/wp\/v2\/posts\/7728"}],"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=7728"}],"version-history":[{"count":1,"href":"https:\/\/trades.iwopremium.com\/wp-json\/wp\/v2\/posts\/7728\/revisions"}],"predecessor-version":[{"id":7733,"href":"https:\/\/trades.iwopremium.com\/wp-json\/wp\/v2\/posts\/7728\/revisions\/7733"}],"wp:attachment":[{"href":"https:\/\/trades.iwopremium.com\/wp-json\/wp\/v2\/media?parent=7728"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/trades.iwopremium.com\/wp-json\/wp\/v2\/categories?post=7728"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/trades.iwopremium.com\/wp-json\/wp\/v2\/tags?post=7728"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}