DailyPlay and Adjusting Trade (SHW, FDX) – Feb 10, 2022

Adjusting Trade

• FDX: 36% Loss: Roll short leg (Feb 25, 2022 $270 Call) as follows:
  • Buy to close Feb 25, 2022 $270 Call for $0.18 Debit. 
  • Sell to open Mar 4, 2022 $260 Call for $0.87 Credit.

This reduces the cost basis of the overall FDX position from $14.46 to  $13.77. By selling OTM calls against the long FDX call, we are consistently reducing the cost basis to provide a better breakeven price. Please note that this is not an open signal for the FDX Call Diagonal Trade, this signal should only be used if you are already in the FDX trade that was opened on December 28th, 2021.

SHW Bullish Opening Trade Signal

Strategy Details:

Strategy: Put Credit Spread

Strategy Direction: Bullish

Details: Sell March 18, 2022 $290/$270 Put Vertical @ $7.00 Credit Limit Order

Counter Trend Signal: This is a bullish strategy on a stock that is experiencing a bearish trend. 

1M/6M Trends: Bearish/Bearish

Technical Score: 4/10

OptionsPlay Score: 83

View SHW Trade

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that as this is a multi-leg option strategy, it should be entered as a single trade.

Investment Rationale

SHW has sold down sharply this year but is starting to find support just above the medium-term support zone shown on its accompanying chart. It marked an Aggressive Sequential -13 “downside exhaustion” signal earlier this week, and is already on a -11 towards a -13 on the Standard Sequential count. Selling this put spread, time passing as this bases is to our advantage, and with the stock already having reported earnings this quarter, there should be no major downside catalyst. We think it bases and moves higher from this general area.