On Friday the stock market traded nearly its entire August range. The $SPY moved almost $3 from top to bottom, and recovered much of the downside into the close.
Only twice in 2016 has the market closed at the lows of the session. Regardless of what the overall market has been doing, there have been some tremendous individual moves and trade possibilities.
While I am looking for the possibility of a modest pull back this week, regardless of where the overall market goes, there are some trades I am looking to make into September for both upside and downside.
Let's start with a few that I think are going lower -
$IBB - I covered this earlier last week, but it bears a revisit.
Last weeks puts ended up working out fairly well. I am not in September puts just yet, but I think these also will work well. Medication prices are becoming a hot topic, and when you have politicians speaking out about it, the market is getting spooked, and I think this will weigh on $IBB going forward.
Momentum has not pushed negative just yet and $IBB broke through resistance recently. There is more confidence in downside on a break back through former resistance and now support. A break would set a clear move to just under $250 for support. That is the downside trade I am looking for.
The September $260 calls have sold off to $.80 , depending on what the open is on Monday we could be looking at even lower prices for $IBB puts. I'll let you know my entry when it happens.
$MSFT soared to a new all time record high on Friday and then collapsed over $1 from there. I entered some $56.50 weekly puts for $.13. The stock closed at $58. These options need a 3% move lower this week for $MSFT.
The market is not expecting much of a move from MSFT... and why not. It has been in a tight range for 4 weeks. Which makes trading for any sharp move cheap as well. Momentum is starting to wane and price action could start to cool off as well.
I think the market is going to take a breather this week. As is such, I am in some $IWM puts for a pull back. Small caps have yet to take out previous record highs, and while they rallied sharply off Friday's lows, if the market pulls back, small caps will be the leaders to the downside.
and now for the higher.
I thought the stock would rally last week, and it did.
The only problem was, I was a spectator. Why? Because I was waiting for $NFLX to break resistance. And it has. Assuming it doesn't crater to $95 on Monday I am looking to get into some Sep $100 calls for a break back into triple digits for the stock.
Once $NFLX breaks $100 the action could really start picking up to the upside. I am looking for September $102 calls for $.75 - .80 on Monday to potentially capitalize on this move.
I'll relay the entry in the chat room and twitter.