For the Trade of the Week I am looking at LOW. I like the structure it’s holding on the daily and intraday, and underneath it is a weekly slingshot squeeze. For the idea, I am looking at 170/185/200 call fly the week before earnings to take advantage of the move in a way that offers some protection and remains outside the expected move for the center strike.
With crude oil heading higher and XLE benefiting from strength later in the year, there could be some more upside in a window dressing/Santa rally and XOM is the relative outperformer in the XLE ETF. The idea is to scale into a long call position at one or each of the three entry levels, with the “aggro” being the smallest position size.
As stocks move forward into December, it behooves us to look back at the past. November’s seasonal optimism generally extends into December. Beginning in the 1940’s, the S&P 500 has logged an impressive average gain of 1.5%, making December the third most profitable month of the year — while also logging a month over month increase 73% of the time. Don’t mess with a bull market!
I am using MSFT and am bullish for a rebound of large cap tech into the end of the year—I will use a regular Butterfly and target the 225 area for 31 DEC. As the market has been so crazy and we could easily pull back, I will manage with a tight stop and/or limit my size with 3 contracts, as discussed in the video.