DailyPlay – Partial Closing Trade (VALE) Conditional Bullish Opening Trade (IEF) – November 14, 2022

Partial Closing trade

• VALE -115.63% Gain: Sell to Close 10 Contracts Dec. 2nd $13.50/$15.50 Call Vertical Spreads @ $0.64 Credit. DailyPlay Portfolio: By Closing 10 of the original 20 Contracts, we will be receiving $640. 

IEF Conditional Bullish Opening Trade

View IEF Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 12 Contracts Dec. 16th $95/$93 Put Vertical Spreads @ $0.47 Credit.

Total Risk: This trade has a max risk of $1,836 (12 Contracts x $153).

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

1M/6M Trends: Bullish/Neutral

Technical Score: 3/10

OptionsPlay Score: 86

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 that this is a CONDITIONAL trade. We will only enter the trade when the condition is met, which is IF the TNX rallies to the 3.97% to 4.01% range anytime this week. Also note that the cost basis, premium paid, as well as the number of contracts when we open this trade will therefore be different from what we post today. This condition is only valid for this week.

Investment Rationale

UST 10-yr. rates will adjust today to include what would have been Friday’s move, given the fixed income market was closed then for Veteran’s Day. Last week’s large downdraft in yields did break key support at 3.94%, but they also stopped at one (3.80%) of two downside targets I highlight in today’s weekly webinar.

Since they are trading very technically, let’s look to take advantage of a potential rate rise sometime this week back to ~4%, where I note first level resistance now lies. So, as a conditional trade, let’s look to sell an IEF (that’s the ETF that most closely inversely tracks the TNX’s direction) Dec.16th $95/$93 put spread when/if the TNX rallies to the 3.97% to 4.01% range (anytime this week) at what is then its mid bid/offer spread price. Bond bulls should be supporting the ETF in that $2 zone on a pullback.

IEF – Daily

Our conditional bullish call spread recommendation in VALE was entered on last Thursday’s decline, when we were able to buy the Dec. 2nd $13.50/$15.50 call spread at 64 cents when the stock got into our $13.75 to $13.50 bidding zone. On Friday, the stock closed at $15.45 (with a high of $15.53), and the spread has already doubled in value. Let’s take half off today.