Can The S&P Get through This Level?
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home | Free Options Trading Videos | Can The S&P Get through This Level?

Can The S&P Get through This Level?

John F Carter 1/29/2014

Welcome to the free video. One of the big things at this point is -- of course we have the FOMC meeting tomorrow -- is are the S&Ps going to be able to get through a 17.96 or not. After hours, they've actually spiked up. In fact, that short doesn't really do this justice. There was -- oh yeah, so we're actually right there after hours, a beautiful squeeze setting up. And you know tomorrow I would look for kind of a rally at the FOMC and then who knows what's going to happen, right.

So on something like this, what I like are -- we talked about this at the live trading class today -- what I like are stocks that are doing above and beyond. So you can see the main thing here on the S&Ps is you can see that the 21 moving period average on a daily chart is here...price action is here. I'm interested in stocks where the relative strength is way better than this and the relative strength is such that they're actually trading above the 21. TSLA is a perfect example of that. I mean that looks fantastic. QIHU, another one I really like. That one really looks great. And then Netflix, fantastic.

During the live trading class today we set this up right here, right when the momentum turned we had set up this trade on Netflix and it just kind of cruised higher and we scaled out of it as it went our way. So on this one -- I mean this was a pretty phenomenal move. As we started off, we bought some 390 calls that at the time were out of the money. And we had kept 5 of those. They started off at $4.25, by the end of the day they were 18. And then from there, so what we did to finance those out of the money calls is we sold some 385, 380 puts and some 375, 370 puts there and there. And then once this triggered we loaded up on some of the 380 calls, Delta 70s 10 days out and scaled out of those as it went. And it ended up as a really solid, I mean, I was not expecting that much of a move.

But now the idea is holding on -- so we sold 60 percent of the position with the idea that this is what do we do tomorrow. Well if you look at this, I mean the 39 minute squeeze here is still cruising along. I would expect you know, what I'm looking for is that we could actually gap up into this line here. At that point, I would actually dump it. So we sold 60 percent of the position. If we gap into this I'd probably sell another 20 percent of the position and then hold on to that 20 percent to see if we can actually get -- you know, could we get up here? I don't know. I'd be willing to do that with a small piece of it but not the entire thing.

Anyway, for the class, if you're interested, the class recap today we just talked about how you know, to find these trades, how to set them up, what we're going to be looking at tomorrow and so it was a lot of fun. So how did we do it? Today was day one. Tomorrow will be day two of the class. We'll be starting off premarket looking for gaps into key Voodoo lines and things like that. And if you are interested in joining us for day two, you can go to You'll be able to get access for day two and at the same time review everything that we taught today for day one. I mean it's just kind of all of the tools, not only the set ups but also the money management skills, whether it's a winning trade or a losing trade to kind of get you through the rest of the year. OK. So I'm looking forward to tomorrow. You guys have a good night and we'll see you at the next update.