This week was the warmup for the main event in December. Powell’s speech on Wednesday sparked a huge wave of buying across the market, and it put QQQ and SPY at their best levels since early September before momentum cooled. With the latter closing above the key 200day sma Friday and the former near the key 100day sma, the bulls still remain in control for now, but the massive volatility seen on Wednesday is a sign of what to expect over the 48 hour stretch on 12/13-12/14 (CPI reading and the FOMC rate decision). This coming week may be a choppy one uness indices resume their climb quickly on Monday/Tuesday, but our focus will be reducing some risk and locking in some trades as the big events get closer. 

Something had to give on ENPH, and it did on Friday (finally!). The stock recovered from the red open quickly, and it broke through key recent resistance on a strong volume surge in the morning. The stock continued to run during the day into the high-330s, sending the Dec16 call fly nicely into the money. It will be on close watch tomorrow following the strong action on Friday. Flys can be tricky when it comes to exits, so if ENPH starts to push into the low-to-mid 340s, it may make sense to book the trade before momentum can accelerate into the 350s or 360s and threaten the top of the fly. Keep an eye out for an update on this one soon.

ZM is on premium salvage watch this coming week. Earnings didn’t deliver a big enough move to reward the Dec16 options, and the stock struggled to find direction this past week, leading to a choppy few sessions where premium contracted on short-term contracts. With both sides of the strangle further out of the money now, we will be watching for either a move to ~70-71 or 80+ for an opportunity to close out the position. We gave the trade a little extra room because it was rolled up prior to earnings, but the lack of movement post-print means it is time to focus on recovering premium.