DailyPlay Update – Opening Trade (XOP) – Partial Closing Trade (GLD) Closing Trade (COPX) – July 6, 2022

Partial Closing Trade

• GLD – 87.57% Loss: Sell to Close 5 Contracts July 15, 2022 $171/$176Call Verticals @ $0.23 Credit. DailyPlay Portfolio: By Closing 5 of the 10 Contracts, we will be receiving $115.

Closing Trade

• COPX – 83.87% Gain: Buy to Close 3 Contracts July 15, 2022 $31/$35 Call Verticals @ $0.15 Debit. DailyPlay Portfolio: By Closing the remaining 3 of the Contracts, we will be paying $45. We took partial profits for this trade on June 28 at a $1.75 Debit. Therefore, the average gain on this trade was -4.3% and the average cost basis to exit this trade is $0.95 Debit.

Bearish Opening Trade Signal

View XOP Trade

Strategy Details

Strategy: Short Call Vertical Spread

Direction: Bearish

Details: Sell to Open 2 Contracts July 29, 2022 $125/$135 Call Verticals @ $1.89 Credit.

Total Risk: This trade has a max risk of $1,622 (2 Contracts x $811 per contract).

Trend Continuation Signal: This is a Bearish trade on an ETF that is experiencing a bearish trend.

1M/6M Trends: Bearish/Bearish

Technical Score: 9/10

OptionsPlay Score: 111

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. 

Note that this is a conditional trade and that you will be notified by email when we are entering this trade. The condition for entering this trade is a short rally from the current price of the underlying stock. We suggest that you place a limit order of around $3.50 for now for this trade. Also, keep in mind that the risk for this trade will be reduced when we enter this trade.

Investment Rationale

What a whacky day yesterday, with early significant weakness ultimately leading to gains in the SPX and Nasdaq while the Dow closed lower.  Energy got dismantled by losing 4% as oil got crushed, but Tech and Communication Services closed in the black as falling rates are now benefitting the very sectors that higher rates recently hurt.

GLD – Weekly

Our short copper trade – via having sold a July 15^th COPX $31/$35 call spread – yesterday reached its weekly Propulsion Full Exhaustion level.  As such, we will cover the balance of our short position today (and look to again sell this on an upcoming rally).

COPX – Weekly

And here’s a new idea, but a conditional one based upon my wanting to see a rally before I’d want to get short.  Let’s look at the XOP, which clearly broke its cloud bullish structure over the past few days.  With it now deeply oversold, I don’t want to first short it now, but if any day over the balance of the week we see a move back up to $125 to $126, I’d then look to short the July 29^th $125/$135 put spread for whatever its mid prices are at the time.

XOP – Daily