6 Oct

My Plans To Trade Around This Major Catalyst

by | 0 comments

 

In a wild turn of events, the POTUS came out and said the White House is stopping stimulus negotiations until after the election.

It was one major catalyst on the table, and it makes sense the market took a dive after that headline.

In this market environment, it’s important to remain nimble and only focus on the best risk-reward opportunities out there.

I want to show you my thoughts on this major catalyst, and how I intend to trade large-caps in this environment.

 

One Indicator To Keep Handy Right Now

 

For me personally, when it comes to my options trades, there are specific indicators I want to use. The one that I believe will be the easiest for most traders to use is the exponential moving average (EMA).

You see, I’ve identified specific EMAs that signal to me where there is likely to be support (or demand) for a stock.

I want to get in near those demand levels, and establish an opinion utilizing options.

Check out this daily chart on Apple Inc. (AAPL).

 

 

Right now, I’m looking for strong stocks that have pulled into either the 8, 21, and 34 EMAs. With AAPL, it’s right around that level and I believe there will be some support around the 55 EMA right around $110.

There are two ways I can play this dip.

If I want to get a little aggressive, I’ll look for at-the-money (ATM) or in-the-money (ITM) calls on AAPL. On the other hand, depending on the price action overnight… I may look to utilize a bull put spread.

That means I would sell a put spread to collect premium because I don’t believe the underlying stock will plummet and get to a specific level. So for AAPL, I may look for $110 / $105 put spread. If I’m more conservative, I’ll look at the $105 / $100 put spread.

Right now, price action is what matters and I’ve found the EMAs help me better time my trades.

I’ll use that process to uncover potential trade ideas in large-caps.

Some stocks at key-moving averages on my radar include:

Spotify Technology (SPOT).

 

 

The key areas I’m watching for potential entries are $245 and $236.

Zoom Video Communicaitions Inc. (ZM) looks interesting here, as it has a bull flag / pennant forming, and is right around the 8 EMA.

 

 

In this market environment, it’s important to remain patient, nimble and understand the price action.

Whether you trade small-cap momentum stocks or mid- and large-caps, understanding how to recognize reliable patterns can be helpful.

Allow me to show you some of my favorite patterns, and after attending this exclusive training session, you might be surprised at how often you see these patterns pop up.

 

0 Comments