September 12, 2018

Taking the Macy’s Escalator Up!

Apple is expected to unveil its biggest and most expensive iPhone today at its fall launch event, with most of the buzz swirling around a rumored phablet (iPhone Xs Max?) that’s supposed to boast a 6.5-inch OLED screen. Two other models will likely be called the iPhone Xs (5.8-inch OLED) and Xr (6.1-inch LCD). More products anticipated include the Watch Series 4, third-gen iPad Pro, budget MacBook, and updated AirPods with a long-delayed charging mat. AAPL +0.6% premarket.

*Source:  Seeking Alpha

Let’s consider Macy’s Inc. (Ticker: M):

The VantagePoint platform recently indicated upside momentum or at the very least, limited downside potential.

Using the predictive indicators embedded within the VantagePoint platform and its predictive AI technology, we will point out three significant things. We have a bullish crossover indicated by the blue predictive indicator line crossing above the black simple moving average on September 11th.  We can combine that with the VantagePoint propriety neural index indicator moving from the RED to the GREEN on the same day.  This indicator measures strength and weakness for a 48-hour period, in this case, bullishness.  The move to the GREEN position further makes the case for a potential bullish scenario. We also have the predicted high and low above yesterday’s actual high and low indicating further strength.  I want to play the VP continued bullish indication.

Strategy Discussion

For active traders with a shorter investment time horizon, you can consider a setup utilizing options. Given the market conditions outlined above, taking a passive, premium credit approach may be the best path to success.

Because of the reasons given above, the sale of a credit put spread may be one way to approach this situation.  You want to collect the most premium that you can while staying within your own risk tolerances.  You may want to consider the M September 21st regular monthly expiration 34.5/35.5 put spread, selling it for $0.35.  The most you can gain is the premium collected and the most you can lose is the width of the spread less any premium collected.  Max reward = $0.35 and max risk = $0.65

This means that you are laying odds of 1.86:1.

Given the trading and market environment outlined above, a trader must evaluate whether this reward/risk ratio is appropriate for his/her risk tolerance.

If you would like to learn more about the VantagePoint platform and take advantage of the exclusive offer that our clients enjoy, please visit:

https://discover.vantagepointsoftware.com/prosper-demo/

about the author:

Mike Shorr

Since 1994, Michael has been an on-the-floor market maker, Vice-President of Interest Rate Derivatives for Knight Financial Products and Director of Education and Options Instructor at Trading Advantage. He makes the oftentimes complex world of options and trading accessible to the novice and advanced trader alike. Michael has a Bachelor of Science degree in Statistics and Finance from the University of Illinois Champaign-Urbana. He presently is Director, Trader Education at ProsperTradingAcademy.

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