IWM

Taken some time off from posting this summer. I currently have a call diagonal and a call calendar on the IWM. I like using options on the major ETFs because of their liquidity and tight bid/ask spreads. Currently this position is designed for a gradual move into 68 by the end of Aug expiration next week. I will be watching the 64 level to hold as support in the current trend.

MLM - closed

Well that was a quick trade ... stopped out as the market reversed mid-day today. I'll look for another bullish entry after the pullback is complete. Remember, one of the keys to profitable trading is keeping losses small and letting winners run ... this is just a numbers game.

MLM

This month I am going to move from trading diagonals and calendars to using verticals. All of of these strategies are vega positive but the vertical has the least exposure to dropping volatility which is the currently the market we are experiencing. (Take a look at the VIX since early Feb)

A vertical spread trade is constructed using two strike prices in the same month. In the example below I noticed MLM pushing new highs on above average volume with resistance sitting at 95. I've constructed an April 90/95 vertical call spread. I'll stop out at 86.86 which is a 78% fib retracement for a $85 loss in an attempt to capture $160 which makes this a 1:2 risk/reward trade. With strong buy volume coming into the stock and OBV on the rise there appears to be a bullish tendency in play at the moment. I will give this position between 5-10 days to reach either my stop or target amount before closing.

US Steel (X)

I ran my scan 6 days ago and noticed the market was showing signs of a healthy rebound. Just prior to this period I noticed an early mover on the DJIA ... CAT. I started a call diagonal and ended up closing it the following week for a nice gain.

This week I opended a similar position on US Steel as it pushed above the 20DMA. I used an OTM Mar55 SC with an ATM April60 LC to create a bullish spread trade. My intent was to capture both time decay and directional movement with limited risk. There are several adjustments to this position if the price breaks down but I haven't had to use them yet.



I like this spread because I have defined risk ($322) with a good return target (50%-75%) and plenty of time for adjustments.

Trade setups

Today I saw several good swing trade setups that are showing low risk entries. All of the following can be managed for an adjustment or close below Friday's low. Remember, these are not reccomendations ... be sure to do your own research before entering.

AMZN, BEN, BUCY, BXP, EMN, FCX, FFIV, GS, JOYG, MOS

AMZN update

I made several adjustments this month to capture the fall after placing the original trade. I rolled down from a Dec 140 SC to a Dec 135 to capture more premium along with some other adjustments. Currently, I have a positive delta position based on the positive move in pricing today. Having the price close above the falling 5DMA is a bullish signal. I'll be using the low of Friday as my adjustment/close point in this trade.

AMZN

AMZN has been in a pullback from it's recent earnings excitement. The stock made a nice base into the 78.6% Fib retracement area and then bounced nicely on Thursday. I started a Bull Call diagonal using a Jan 135/Dec 140. The time decay is about $14 per day on the Dec short call which is currently out of the money. Dec options expire next week. I plan to hold this position for a few weeks unless the price moves over 140 next week then I will need to make an adjustment.