DailyPlay – Opening Trade (NEE) – October 10, 2022

NEE Bearish Opening Trade

View NEE Trade

Strategy Details

Strategy: Short Call Vertical Spread

Direction: Bearish

Details: Sell to Open 6 Contracts Nov. 18th $77.50/$82.50 Call Vertical Spreads @ $1.97 Credit.

Total Risk: This trade has a max risk of $1,818 (6 Contracts x $303).

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

1M/6M Trends: Bearish/Bearish

Technical Score: 6/10

OptionsPlay Score: 106

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 traded back and forth in a range on Monday, taking out both overnight highs and lows of where S&P futures traded. The SPX declined 75 bps. to 3612, less than 30 pts. from the recent 2022 low. (As I mentioned I would do in yesterday’s morning webinar, I did kick out the S&P futures at the same price I had bought them at on Sunday night (3634), as I didn’t see any reason to keep them into today. The market remains heavy and, in my view, headed downward to my mid-3400 target, where I will likely start to replace some of SPYs that I sold out of earlier this year.

A new recommendation for today is to enter a bearish bet on Nextera Energy.  After seeing five failures this year north of the upper-$80s – three of which were accompanied by Setup +9s – I think this still has room to the downside to near $70. So, let’s look to short an NEE November 18th $77.50/$82.50 call spread for what closed yesterday at $1.975 mid, collecting just about 40% of the spread.

NEE – Weekly