Trade Ideas | 11/8/18
October volatility is starting to fade as the markets recover after the midterm elections. My contrarian directional bets in the last edition were good calls, as were my neutral bets, and I'm looking to repeat that success. I'm looking out to December expiration for these trades, by the way.
$FEYE - Just had good earnings and is trading way up as the market recovers ... it's just gone too far. The stock will probably retest multi-year highs before going any higher, and if it fails to hold those highs, next stop is short term support. It's all shown on the corresponding $FEYE chart. I think a debit put spread is the way to go because, if you want to spice things up, you can remove the short put hedge if $FEYE fails to hold those highs and ride the naked short delta of the long put to the recent support levels for a nice profit.
$SBUX - Same story here except the stock is even more overbought and is showing some more strength today, not weakness. I'd say wait and see if we get an exhaustion candle tomorrow or Monday before getting delta short (an exhaustion candle is a gap up that is faded during the session above the top Bollinger Band).
$GLD - I'm surprised that the recent bout of volatility did virtually nothing for gold. So because of that, I believe gold stays range bound and that an Iron Fly would be a good trade.