A Trio of Trade Ideas

There are still plenty of earnings coming this week, so we could see this weakness flip on a dime -- or a dime beat by a large enough company, whatever the case may be. Looking at this weakness on the SPDR S&P 500 (SPY), a few warnings signs emerge. I can't wait for an "I told you so" when a selloff finally comes, even if the person has been on the wrong side of the trade for weeks, expecting a pullback to come from much lower levels. I have my eyes on $149.50. If we close beneath there, then I want to actively protect longs and look for active short-side trades. The Relative Strength Index has done a double dip below 70, which I view as bearish, but we haven't lost all the momentum, as evidenced by the stochastics. I really want to see it dip below 80. We've been too hot for too long for the TRIX to come into play here. For now, just set it aside.

SPDR S&P 500 (SPY) Source: StockCharts.com View Chart » View in New Window »

I don't think any earnings tonight will set the tone for tomorrow. Baidu (BIDU), however, is going to be of interest to many traders. I am only looking for about a $5 move here, although I see $13 possible on a really big blowout or blow-up. Those feel like lotto tickets to me and given the premium on this name, it is a tough play. My approach would be to play IV implosion here, but give it room. For example, I would consider pairing for the following trade. On the downside, long the February 22 $100 put and short the February $97.50 put. While on the long side, I would be long the February 22 $115 call, short 2x February 8 $120 calls and long 1x February 8 $125 calls. All this will cost about $3.50, which is still on the high side. My position size here will only risk about a quarter of 1% as my confidence is only middle ground....143 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

Read the full story and get access to the Real Money Pro trading floor.

There’s no substitute for a trading floor to get great ideas, so Jim Cramer created a better one at Real Money and blogs there exclusively. We then added legendary hedge fund manager, Doug Kass, with his exclusive Daily Diary and best investing ideas. Staffed with more than 4 dozen investing pros, money managers, journalists and analysts, Real Money Pro gives you a flood of opinions, analysis and actionable trading advice found nowhere else, and allows you to interact directly with each expert.

Already a Subscriber? Please login.

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.