DailyPlay – Opening Trade (ADI) Closing Trade (JNJ) Partial Closing Trade (DAL) – July 21, 2022

Closing Trade

JNJ – 54.90% Loss: Sell to Close 3 Contracts Sept 16, 2022 $175/$190 Call Verticals @ $2.81 Credit. DailyPlay Portfolio: By closing all 3 Contracts, we will be receiving $843.

Partial Closing Trade

DAL – 71.70% Gain: Sell to Close 6 Contracts Aug 19, 2022 $30/$35 Call Verticals @ $2.73 Credit. DailyPlay Portfolio: By closing 6 of the 12 Contracts, we will be receiving $1,638.

Bearish Opening Trade Signal

View ADI Trade

Strategy Details

Strategy: Short Call Vertical Spread

Direction: Bearish

Details: Sell to Open 3 Contracts Aug 26, 2022 $165/$175 Call Verticals @ $3.90 Credit.

Total Risk: This trade has a max risk of $1,830 (3 Contracts x $610 per contract).

Counter Trend Signal: This is a Bearish trade on a stock that is experiencing a bullish trend.

1M/6M Trends: Bullish/Mildly Bullish

Technical Score: 9/10

OptionsPlay Score: 107

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. 

Please note these prices are based on the previous day’s closing prices. Should the underlying move significantly during the pre-market hours, we will likely adjust the strikes and prices to reflect a more accurate trade entry. This will be reflected in the Portfolio tab within the OptionsPlay platform.

Investment Rationale

We have seen an incredible amount of strength from semis these past couple of weeks as the market finds a temporary bottom. However, that does not change the overall underperformance of the sector and my preference is to seek short exposure on this strength. There is one name that jumps out as a potential opportunity to fade this strength. I’m looking at Analog Devices (ADI) which printed a daily +9 count.

Additionally, we are approaching a prior resistance area around $167.50, which also corresponds with the weekly cloud bottom. To fade this rally, I’m going to sell a call credit spread, using the Aug 26 $165/175 Call Vertical for a $3.90 Credit (39% of vertical width).

ADI – Daily