DailyPlay – Opening Trade (BA) Closing Trades (ADI, CRM) Partial Closing Trades (VALE, BEAM) – August 23, 2022

Closing Trades

• ADI – 53.85% Gain: Buy to Close 1 Contract Aug 26, 2022 $165/$175 Call Verticals @ $1.80 Debit. DailyPlay Portfolio: By closing the remaining 1 of 3 Contracts, we will be paying $180. We Closed 2 of the 3 Contracts of this trade on August 2 at $6.30 Debit. Therefore, the average loss on this trade is –34.62% and the average cost basis to exit this trade is $4.80 Debit.
• CRM – 1.60% Loss: Buy to Close 1 Contract Sept 2, 2022 $175/$160 Put Verticals @ $4.45 Debit. DailyPlay Portfolio: By closing the remaining 1 of 2 Contracts, we will be paying $445. We took partial profits for this trade on August 10 at $3.57 Debit. Therefore, the average gain on this trade is 8.45% and the average cost basis to exit this trade is $4.01 Debit.

Partial Closing Trades

• VALE – 51.85% Loss: Sell to Close 25 Contracts Sept 2, 2022 $13.50/$14.50 Call Verticals @ $0.13 Credit. DailyPlay Portfolio: By closing 25 of 70 Contracts, we will be receiving $325. 
• BEAM – 164.08% Gain: Sell to Close 2 Contracts Sept 16, 2022 $60/$50 Put Verticals @ $6.47 Credit. DailyPlay Portfolio: By closing the remaining 2 of 4 Contracts, we will be receiving $1,294. 

BA Bearish Opening Trade Signal

View BA Trade

Strategy Details

Strategy: Long Put Vertical Spread

Direction: Bearish

Details: Buy to Open 4 Contracts Sept 16, 2022 $160/$145 Put Verticals @ $4.85 Debit.

Total Risk: This trade has a max risk of $1,940 (4 Contracts x $485 per contract).

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

1M/6M Trends: Neutral/Neutral

Technical Score: 3/10

OptionsPlay Score: 135

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

Stocks got hammered yesterday on follow-through selling from Friday’s fall, as well as an increasing belief that Fed Chair Powell will be far more clearly hawkish at his press conference this Friday from Jackson Hole. (10am ET.) The two-day drop was a hefty 200 SPX points – a rather large move of almost 5% from high to low. As I write this commentary on Monday evening, I see the S&P futures up about 20 bps., and it wouldn’t surprise me if we see some midday strength today to take some of the decline away. However, as I said in Monday’s AM webinar, I think the SPX gets to the mid- to low-4000s on this corrective down move, so I’ll still be looking to lean into charts that appear to be fading from the summer rally.

One such name is a big Daddy-O type one:  it’s Boeing (BA). Its weekly chart shows a Setup +9 two weeks ago, and its daily chart now shows a bearish “island reversal” pattern upon yesterday’s gap down that offset the late-July gap higher.  This after marking a daily Sequential +13 reading on the gap up, and a complete stall against a prior support level.

BA – Daily

Put these together, and we’ll look to buy a September 16^th $160/$145 put spread. On Monday, that closed at $4.845, and I don’t want to buy it for any more than that (and preferably less today should we see the overall market move higher in the first half of the day).

POSITION CHANGES:

• We are short an ADI August 26^th $165/$175 call spread that expires on Friday. There are now both daily and weekly support levels very close to the current price. Let’s close this out today with what showed a 54% profit as of Monday’s closing mid prices.
• We are short a CRM September 2 $175/%$160 put spread that we are at breakeven on. Let’s close that out today.
• We’re long VALE September 2 $13.5/$14.5 call spreads, and now down 52% on them. Let’s exit today 25 of the 70 spreads we have on.
• We’re still long 4 of the original 8 BEAM September 16^th $60/$50 put spreads. We’re up $164% on this portion, so we’ll remove 2 of the 4 today.