DailyPlay Opening Trade Signal (ORCL) – May 5, 2022

View ORCL Trade

Strategy Details

Strategy & Direction: Short Put Vertical Spread – Bullish

Details: Sell 6 Contracts June 17 72.50/67.50 Put Spread @ $1.36 Credit

Total Risk: This trade has a max risk of $2,268 (6 contracts x $378 per contract). 

Counter Trend Signal: This is a Bullish strategy on an ETF that is experiencing bearish 1M and 6M trends.

1M/6M Trends: Bearish/Bearish

Technical Score: 4/10

OptionsPlay Score: 81

Entering the Trade

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

Investment Rationale

Fed Chair Powell gave investors a pleasant surprise (i.e., not intending to raise rates by 75 bps. at any subsequent 2022 meeting), leading to the best-up day for the SPX in a couple of years. Add that to the SPX holding right against the bottom of its weekly cloud this week and we have a good line in the sand for now. (In the future, getting beneath this week’s low will likely lead to a bigger decline down to my 2022 worst-case scenario 3617 target.) But for now, the SPX and QQQ have both held precisely where they needed to.

While looking for a new bullish Daily Play position to enter, I came across the Oracle (ORCL) chart, which looked interesting not only because it marked a daily Setup -9 yesterday, but it did so right into a support level made up of the two prior lowest closes of 2022 (i.e., the zone created by the two horizontal purple lines).  I suspect that by week’s end, we should get a chance to see price come back down to the $74 to $73.50 area on an intraday basis, when I’d then look to sell a June 17th $72.50/$70 put spread (for whatever the mid-price is at that time).  

So, yes, this is one of those “conditional” trade ideas Tony and I mentioned we’d be soon adding to the repertoire of Daily Play ideas we give to you.  Yes, it means that you should set a price alert on whatever charting platform you use to signal you that it’s time to look to put on this idea.  And yes, we will do our best to send you a timely email reminding you that it’s time to get into the trade.