Let me show you what I am seeing on the SPDR S&P 500 (Ticker: SPY):
There is a possible doji in yesterday’s candle formation. This could be signaling a reversal from this rally since the low of $414.70 on June 18th.
I think the SPY could pull back to the $420 level.
If it opens and trades lower today I will buy the Jul09 427.50 puts with an implied volatility of 7.74 and sell the 417.50 puts with IV of 12.83.
Nice vol difference and pretty cheap with ten days until expiration.
If SPY opens and trades lower today, I will pay around $1.50 for this put spread.
With the July 4th holiday this weekend, these options will be losing premium into Friday so I need a move right away to get the 427.50’s into the money.
I will get out if the spread trades down to $1.00 and I will take profits $2.50 and higher.
I had previously recommended put spreads in both Pinterest (Ticker: PINS) and Lululemon Athletica (Ticker: LULU).
The dojis did not pan out in either stock, but that’s ok. I did not enter the spreads so no money lost.
I did take some profits on my Marathon Digital (Ticker: MARA) Jul16 29/36 call spread selling 60% at $3.00.
Watch yourself out there.
Thanks for Reading … See You Next Tuesday!