9,000 on the Nasdaq 100 (/NQ) is so close we can taste it. Well, not so much taste it as short it as big levels like this are usually excellent spots for corrections. At 8,500 we pulled back to 8,200 and our first attempt at 8,000 (only 2 months ago) was rejected for 200 points before getting back on the bull train so the odds of getting a pullback here, at 8,995 are certainly worth the risk of stopping out at 9,001 with a $120/per contrract loss while even just a 100-point drop back to 8,900 would be a gain of about $2,000 per contract.
Finding very positive reward/risk scenarios is the key to good Futures trading – something we discusssed in yesterday's Live Trading Webinar. Where we shorted the S&P (/ES) at 3,258 and the Dow (/YM) at 28,740 and both of those had quick stop outs at 3,260 (-$100) and 28,750 (-$50) but our long on Gasoline (/RB) was 2 contracts at $1.646 and we're already at $1.657 for a quick $462 so far (they are good to next week's webinar) and now we can add an /NQ short at 8,990 and another at 8,998 to average 8,994 with a stop at 9,001 for a $140 loss against the potential $4,000 gain at 8,900 – that's a fair way to play, right?
If we're still testing 9,000 at the open, that should be about $20.50 on the Nasdaq Ultra-Short ETF (SQQQ) and we can play for a quick pullback by simply taking the Jan $21 calls at 0.40 so let's say we risk the same $140 by taking 14 of those for $560 and stop out at 0.30 for a $140 loss but hopefully we make well over $1,000 on a nice plullback.