Optioneering Newsletter

December 9, 2018

Mini Dow Futures Monthly

Be careful! The market is very volatile right now. Last week the Mini-Dow
looked like it was poised for a run to new highs. This week it looks like it’s
ready to decline below the moving average line and turn the trend down.
With that in mind, this week we will review three bear put spreads and one
bull call spread.

The first profit opportunity we will consider this week is in SAGE, or

Sage Therapeutics, Inc. SAGE is a biopharmaceutical company
developing and commercializing medicines to treat life-threatening
central nervous system (CNS) disorders. SAGE provides treatments
for schizophrenia, major depressive disorder, pain, and traumatic
brain injury conditions
 SAGE Monthly

If a stock is above the monthly moving average line, it’s in an uptrend. If the
stock price is below the monthly moving average line, it’s in a downtrend.
SAGE is below the moving average line, so the trend is down.
 SAGE Daily

SAGE posted the highest price of the year in late January. It’s been in a
gradual decline since the January top. A further decline is expected. The
next downside targets are 80 and 60.

We are going to review a Put Debit Spread for SAGE.

Traders who want more leverage can buy SAGE puts. Sage has options
expiring every week until January 25th. After that, SAGE has options expiring
in February, May, and January 2020.
 Buy to Open SAGE February 15th expiration 120-strike PUT
Sell to Open SAGE February 15th expiration 105-strike PUT

We can see from the Put Option Spread Analysis Calculator that if the SAGE
stock price increases by 2.5%, stays where it is, or declines in price when the
options expire, the spread will make at least a 59.5% or $550 profit. If SAGE
is up 5% when the options expire, the profit will be 31.7% or $294. If SAGE is
up 7.5% when the options expire, the spread will make 4% or $37.

The next profit opportunity we will consider this week is in SOXL. SOXL, or
the Direxion Daily Semiconductor Bull and Bear 3X Shares. SOXL seeks
daily investment results, before fees and expenses, of 300% or 300% of the
inverse (or opposite) of the performance of the PHLX Semiconductor Sector
Index.
 SOXL Monthly

SOXL was in a very strong bull trend from early 2016 until this year’s high.
Now SOXL seems to be declining as fast as it shot up. The next downside
targets are 60 and 40.
 SOXL Daily

The daily chart is consistent with the monthly chart. However, the daily chart
displays the recent pause more clearly than the monthly. A pause like this
points to a further decline. The next downside target is 60. Longer term, we
see the potential for a decline to 40 or lower.

We are going to review a Put Debit Spread for SOXL.

Traders who want to employ a more leveraged approach can buy SOXL
puts. SOXL has options expiring in December, January, February, May,
January 2020, and January 2021.
 Buy to Open SOXL February 15th expiration 100-strike Put
Sell to Open SOXL February 15th expiration 90-strike Put

We can see from the Put Option Spread Analysis Calculator if the SOXL ETF
price increases by 2.5%, stays where it is, or declines in price when the
options expire, the spread will make a 61.3% or $380 profit. If the SOXL
stock price is up 5% when the options expire, there will be a
53.2% or $330 profit. If SOXL is up 7.5% when the options expire, the profit
will be 18.5% or $115.

The next profit opportunity we will review this week is in TECL, or The
Direxion Daily Technology Bull and Bear 3X Shares. TECL seeks daily
investment results, before fees and expenses, of 300% or 300% of the
inverse (or opposite) of the performance of the Technology Select Sector
Index.
 TECL Monthly

TECL was extremely bullish from the 2016 low to this year’s high. Now it’s
below the moving average line, so, by definition, TECL is now in a bear trend.
 TECL Daily

As we said above, TECL is now in a bear trend and there is plenty of room
for a further decline.

We are going to review a Put Debit Spread for TECL.

Traders who want to employ a more leveraged approach can buy TECL Puts.
TECL has options expiring in December, January, February, April, and July.
 Buy to Open TECL February 15th expiration 110-strike Put
Sell to Open TECL February 15th expiration 100-strike Put

We can see from the Call Option Spread Analysis Calculator if the TECL
stock price increases by 2.5%, stays where it is, or decreases in price when
the options expire, the spread will make an 81.8% or $450 profit. If TECL is
up 5% when the options expire, the profit will be 42.6% or $450. If the TECL
ETF price is up 7.5% when the options expire, the spread will lose -1.6% or
-$9.

The last profit opportunity we will review this week is in BNFT, or

Benefitfocus, Inc. BNFT offers cloud-based software solutions to consumers,
employers, insurance carriers and brokers. BNFT’s platform of products and
services enable customers to efficiently shop, enroll, manage and exchange
benefits information.
 BNFT Monthly

The monthly chart shows that BNFT just broke through the top of a four year
trading range. A trading range breakout can result in a significant advance.
 BNFT Daily

On a daily basis, BNFT just hit a new all-time high on Friday. New record
highs are a positive sign for the bulls.

We are going to review a Call Debit Spread for BNFT.

Traders who want more leverage can buy BNFT calls. BNFT has options
expiring in December, January, February, and May.

Buy to Open BNFT February 15th 40-Strike Call

 Sell to Open BNFT February 15th 50-Strike Call

We can see from the Call Option Spread Analysis Calculator that if the BNFT
stock price stays the same as it is now or increases in price when the options
expire, the spread will make a 41.8%, or $295 profit. If the BNFT stock price
is down -2.5% when the options expire, the profit will be 32.8% or $231. If the
BNFT stock price is down -5% when the options expire, the profit will be
14.9% or $105. If BNFT is down -7.5% when the options expire, the spread
will lose -3.1% or -$22.

EARNINGS SEASON: There are four “Earnings Seasons” a year. The

seasons begin in January, April, July, and October and they each last
about two months. The earnings reports can have an impact on the stock
price. We don’t know if the impact is going to be positive or negative (or
nothing at all). It’s up to you to decide if you want to be in a trade when the
earnings report is announced. Here’s a link for a page that can help you
keep track of the report dates:

https://www.earningswhispers.com/calendar

Note: Profit performance displayed in this newsletter does not include transaction
costs.
 This newsletter includes some trading ideas following Chuck Hughes’ trading
strategies along with educational information. For a complete listing of Chuck’s
exact trades, including specific entries and exits and real time Portfolio tracking,
please call Brad at 1- 866-661-5664 or 310-647-5664