Considering Friday’s price action in the S&P 500, the NASDAQ 100, and Technology, it suggests prices should go higher.
Friday’s bullish price action may have resulted from high open interest and options that expired on Friday.
We will see this week what follow-through there is to the upside or the lack thereof.
A breakout failure would signal the probability of a move lower since it would be a shock to longs.
Our market internal gauges gave a sell signal near the end of last week.
Sell signals have never been pinpoint accurate, historically, but they’ve always provided good information to be respected.
It was an increase in put buying (bearish bets) on Friday, which occurred in a market moving higher.
It’s uncertain whether that bearish options activity is related to the options expiration, but we will get more information and greater insights this week.
Historically, an increase in bearish options activity on a rally day would be a good sign: meaning skepticism in the strength.
For the last couple of months, the erratic price action that’s been going on in the broader markets does not support an aggressive bullish or bearish bias.
NEW TRADING IDEAS
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6/7: ADNT – Over $53.17, consider shorting Jun (6/11) $50/45 bull put credit spread for a limit of $.60/share (closed at $.70/share). Bullish +123 Continuation. Stop $50.08.
6/7: CZR – Over $111.32, consider shorting Jun (6/11) $106/100 bull put credit spread for a limit of $.55/share (closed at $.64/share). Continuation Breakout. Stop $106.48.
6/7: ZM – Over $339.00, consider shorting Jun (6/11) $317.5/307.5 bull put credit spread for a limit of $.90/share (closed at $1.10/share). Anticipated Breakout after +WRB engulfing. Stop $318.24.
6/7: COIN – Under $227.50, shorting Jun (6/11) $242.5/252.5 bear call credit spread for a limit of $.85/share (closed at $.95/share). Breakdown. Stop $241.62.
6/7: SNOW – Over $244.86, consider shorting Jun (6/11) $227.5/217.5 bull put credit spread for a limit of $.85/share (closed at $1.00/share). Anticipated Breakout. Stop $227.98.
6/7: BABA – Over $219.08, consider shorting Jun (6/11) $215/205 bull put credit spread for a limit of $1.05/share (closed at $1.20/share). Pullback and reversal on Support after +Gap Breakout. Stop $215.88.
VIDEO ON OPEN TRADES AND ADJUSTMENTS (NOTE: Also in Member’s Area in Open/Closed Trade Sheet)
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Options Strategies Definitions Videos Here
Please read the information on Money Management below Learn how Master Trader Technical Strategies – MTS and MTS with Options Strategies can make consistent money.
Please read the valuable information in the RESOURCES tab after you log into your Member’s Area:
Because your success is vital to you – and us. Before selling options or credit spreads, we urge you to review the valuable and detailed information that we have provided for you in your Member’s Area.
If You’re in a Rush to Start A quick simplified approach to calculating contract size is to simply base your contract size based on the number of shares permitted in your Trading Plan as if you were trading the stock or ETF. Simple Share Sizing = $ Risk / Stop Loss The amount of money that you are willing to risk – divided by – the stop loss amount. For example, $100 / .20 = 500 shares. Credit Spread example, if your Trading Plan allowed you to trade 543 shares of AAPL based on the stop loss, then simply round down to the nearest hundred and short an equivalent number of contracts of the option. Since 1 contract represents 100 shares of the underlying, this would be five (5) contracts.
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Happy trading! If you have any questions or comments, please e-mail Greg Capra at Greg@mastertrader.com or Dan Gibby at Dan@mastertrader.com
All the best,
Greg Capra Managing Director of Master Trader
Dan Gibby Chief Options Strategist
NOTE: Master Trader will show opening and closing prices of all stock and options trades. We recommend that all traders and investors use proper share sizing for positions and money management. However, we cannot recommend what that is for your particular trading style, risk tolerance, or account balance. We urge you to calculate your own share/position size based on your individualized risk parameters, Trading Plan, and familiarity with the proposed trade strategy and risk. Advanced Management Strategies (AMS) covers in detail foundational and advanced position and money management.
NOTE: Master Trader and its representatives may have existing positions in actual or other trade recommendations before or after suggested herein. Additionally, we may manage them differently for internal purposes based on different risk parameters than noted herein. All trade ideas and content are for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, option or investment strategy is suitable for any person. Trading securities can involve high risk and the loss of any funds. Significant gaps or volatility can increase these losses, particularly for short option strategies. Investment or trading information provided may not be appropriate for all investors, and is provided without respect to individual financial sophistication, financial situation, investing time horizon or risk tolerance. Supporting documentation for any claims (including claims made on behalf of options programs), comparison, statistics, or other technical data, if applicable, will be supplied upon request. Master Trader Consulting, Inc. is not a licensed financial advisor, registered investment advisor, or a registered broker-dealer. Options, futures and futures options are not suitable for all investors.