DailyPlay – Opening Trade (SPY) Trade Update (INTC) – October 20, 2022

INTC Update

• We will let this short $35 leg that expires this Friday expire worthless. We will then only be long the $35 leg that expires on Jan 20, 2023

SPY Bullish Opening Trade

View SPY Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 8 Contracts Nov. 9th $365/$361 Put Vertical Spreads @ $1.50 Credit.

Total Risk: This trade has a max risk of $2,000 (8 Contracts x $250).

Counter Trend Signal: This is a Bullish trade on a stock that is experiencing a neutral to bearish trend. 

1M/6M Trends: Neutral/Bearish

Technical Score: 5/10

OptionsPlay Score: 90

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 saw a minor pullback on Wednesday, mostly from interest rates not starting a possible trend reversal like we have begun to see in the dollar and equity markets. Will rates continually edging to new 2022 highs be a problem for dollar bears and stock market bulls? Probably. 

In September I called for a stock market trading bottom to come in mid-October, looking for the first SPX weekly Setup -9 of the year to give bulls something to lean on. We came into this week on a Setup -8 count through last Friday, and many just jumped at the visible Setup -9 count on their charts on Monday, sending stocks up over 2%. But as I said earlier this week, that count will flip from a -9 to a +1 on Friday (killing the downward count) should the SPX close above 3693.26 tomorrow. That wouldn’t mean that the SPX couldn’t rally, but it would take away a good reason for it to do so from when it did.

If I am going to be right that the market holds up through Election Day, then I’m willing to be a seller of a SPY Nov. 9 $365/$361 put spread, collecting $1.50 (based on yesterday’s closing mid prices) or 37% of the 4-pt. spread differential that is a bit out-of-the-money.

SPY – Daily

We also have an INTC calendar call spread on, the first leg of which we are short the $35 call that expires on Friday. We’re going to let it go out and keep our previously received premium, and stay long the January $35 call.

Lastly, we are long the final 2 SRE Oct 21 $165/$145 put spreads, with yesterday closing just under $144. Let’s close these two contracts out today as they expire tomorrow, and it’s been a big winner for us.