Author: Bryan Halliday

We entered into a put butterfly spread in Apple (AAPL) today ahead of the FOMC meeting. While the Fed is expected to keep rates unchanged, a rate cutting cycle is about to embark. While counter-intuitive, this is historically a more difficult time for markets because the Fed cuts rates to spur on economic activity and as a response to issues within the market. There is no arguing that AAPL is an amazing company. It reports earnings on Thursday and will probably beat on earnings/revenues as usual. However, just as we saw with MSFT, that doesn’t guarantee an upward move in the stock. Current buyers of the stock are much more concerned with future growth, revenues and earnings, not what happened in the last quarter. And that is where the uncertainty lies for the large cap tech space and with the broad markets in general. We like the risk/reward opportunity. The details are as follows: Buy to open: AAPL Oct 18th (monthly) 220.00 strike put (ratio of 1) Sell to open: AAPL Oct 18th (monthly) 200.00 strike put (ratio of 2) Buy to open: AAPL Oct 18th (monthly) 180.00 strike put (ratio of 1) Debit: 3.84 Max risk = 3.84 or $384.00 per spread Max reward = 16.16 or $1,616.00 per spread

We own a call butterfly in SNAP that has been going the wrong way. We have added a 1×2 put spread today. This is a trade that profits from a downside move in the stock. However, the lower put is “naked” and thus requires that we would be willing to own 100 shares if the stock goes down dramatically. The details are shown below. Bought to open:  SNAP Aug 16th (monthly) 13.00 strike put (ratio of 1) Sold to open:  SNAP Aug 16th (monthly) 11.00 strike put (ratio of 2) Debit: 0.33 Max Reward = 1.67 or $167.00 per spread Likely Risk = 0.33 or $33.00 per spread Max Risk = Buying 100 shares but at a cost basis of 9.33 per share

Today we have added a short put spread in EQT. This is an aggressive trade and one we view as a possible entry point into owning the stock. We are selling an ITM put and buying an OTM put for protection. If the stock goes up, we make money. If the stock goes down, we could potentially sell our lower strike put and allow the stock to be delivered to us at an improved cost basis. This company operates in the Natural Gas markets, an area of interest for us as investors. Sell to open: EQT August 16th (monthly) 38.00 strike put Buy to open: EQT August 16th (monthly) 33.00 strike put Credit:  2.66 Max risk = 2.34 or $234.00 per spread Max reward = 2.66 or $266.00 per spread In addition, we bought a starting position of shares in OXY. We purchased 30 shares today at 61.04. Which is $1,831.20 or a very small starting position.

We own 100 shares of INTC with a covered call. The stock is currently in an abnormally tight Bollinger-Band squeeze pattern. While this suggests that we could be on the cusp of a volatility expansion in the near future. It does not suggest which direction the spike will go. We are leaning toward protecting the downside and see a move lower as slightly more likely than upside in the short-term. Mainly because the stock came from a downtrend and has been unable to rally with the Nasdaq recently (relative weakness). If we go higher, our covered call will benefit. If we go sharply lower, we will be able to take a profit on the protective put to offset some of the risk. Buy to open: INTC Sep 20th (monthly) 30.00 strike put Debit: 1.85 Max risk = 1.85 or $185.00 per contract We discussed our viewpoints on the Nasdaq exhaustion. We traded it with a long put and will now put on a lower delta spread trade. This won’t move quite as rapidly in value as a long option would. However, it still gives us a way to make some profits on a downside move in the coming weeks/months ahead in QQQ. Buy to open: QQQ Sep 20th (monthly) 480.00 strike put Sell to open: QQQ Sep 20th (monthly) 470.00 strike put Debit: 3.40 Have a great week!

We are entering into the position that was discussed in the session today. Here are the details:

Buy to open:  QQQ Aug 16th (monthly) 485.00 strike put
Limit Debit:  10.30