Optioneering Newsletter

December 30, 2018

Mini Dow Futures Monthly

The rules say that if an index, stock or ETF is below the monthly moving
average line the trend is down. However, since the market rallied recently,
this week we’re going to review two bull call spreads and two bear put
spreads.

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

the ProShares Ultra QQQ. QLD seeks daily investment results,
before fees and expenses, that correspond to two times (2x) the
daily performance of the NASDAQ-100 Index.
 QLD 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.
QLD is below the moving average line, so the trend is down.
 QLD Daily

The daily chart shows that QLD didn’t really participate in the recent market
rally. A further decline is expected.

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

Traders who want more leverage can buy QLD puts. QLD has options
expiring in January, February, April, July, January 2020 and January 2021.
 Buy to Open QLD February 15th expiration 78-strike PUT
Sell to Open QLD February 15th expiration 68-strike PUT

We can see from the Put Option Spread Analysis Calculator that if the QLD
ETF price increases by 2.5%, stays where it is, or declines in price when the
options expire, the spread will make a 53.8% or $350 profit. If QLD is up 5%
when the options expire, the profit will be 31.4% or $204. If QLD is up 7.5%
when the options expire, the spread will make 6% or $39.

The next profit opportunity we will consider this week is in DUG. DUG, or the
ProShares UltraShort Oil and Gas, seeks daily investment results, before
fees and expenses, that correspond to two times the inverse (-2x) of the daily
performance of the Dow Jones U.S. Oil and Gas Index.
 DUG Monthly

DUG really took off this month. Now that it’s above the moving average line,
it’s definitely in an uptrend. A monthly close below this month’s low of 36.71
would put the bullish outlook on hold.
 DUG Daily

The daily chart is consistent with the monthly chart. The pullback inside the
Keltner Channel gives us a buying opportunity.

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

Traders who want to employ a more leveraged approach can buy DUG calls.
DUG has options expiring in January, February, April, and July
 Buy to Open DUG February 15th expiration 38-strike Call
Sell to Open DUG February 15th expiration 48-strike Call

We can see from the Call Option Spread Analysis Calculator if the DUG ETF
price declines by 5%, stays where it is, or increases in price when the options
expire, the spread will make a 56.3% or $360 profit. If DUG is down 7.5%
when the options expire, the profit will be 37.6% or $241.

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

CURE was in a relatively steady uptrend from the time the chart started until
this month. This month’s big bearish reversal points to a further decline. It
could be a substantial decline. A monthly close over this month’s high could
be very positive for the bulls.
 CURE Daily

The daily chart depicts the initial decline very well. CURE found a bit of
support right where we would expect it to find initial support. A break of
support at this month’s low could result in a significant decline.

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

Traders who want to employ a more leveraged approach can buy CURE
Puts. CURE has options expiring in January, February, May, and August.
 Buy to Open CURE February 15th expiration 57-strike Put
Sell to Open CURE February 15th expiration 47-strike Put

We can see from the Put Option Spread Analysis Calculator if the CURE
stock price increases by 2.5%, stays where it is, or decreases in price when
the options expire, the spread will make an 62.6% or $385 profit. If CURE is
up 5% when the options expire, the profit will be 46.8% or $288. If the CURE
ETF price is up 7.5% when the options expire, the spread will make a
28.2%% or $173 profit.

The last profit opportunity we will review this week is in TEAM, or Atlassian
Corporation Plc. TEAM is engaged in designing, developing, licensing and
maintaining software and the provisioning of software hosting services.
TEAM’s products include JIRA for team planning and project management;
Confluence for team content creation and sharing; HipChat for team
messaging and communications; Bitbucket for team code sharing and
management and JIRA Service Desk for team services and support
applications.
 TEAM Monthly

The monthly chart shows that TEAM has been in a strong bull trend for over
a year. After a pullback in October, a higher low bottom appears to be in
place at last month’s low. A further advance is expected.
 TEAM Daily

On a daily basis, TEAM posted a low for the pullback at last month’s low and
formed a higher low bottom at this month’s low. Since higher low bottoms
point to higher high tops, the next upside target is above this year’s high.

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

Traders who want more leverage can buy TEAM calls. TEAM has options
expiring in January, February, March, June, January 2020, and January
2021.
 Buy to Open TEAM February 15th 75-Strike Call
Sell to Open TEAM February 15th 85-Strike Call

We can see from the Call Option Spread Analysis Calculator that if the TEAM
stock price declines by -2.5 %, stays the same as it is now, or increases in
price when the options expire, the spread will make a 60%, or $375 profit. If
the TEAM stock price is down -5% when the options expire, the profit will be
31.5% or $197. If TEAM is down -7.5% when the options expire, the spread
will lose -3.5% 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