DailyPlay – Conditional Opening Trade (GLD) – November 15, 2022

GLD Conditional Bullish Opening Trade

View GLD Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 5 Contracts Dec. 16th $160/$155 Put Vertical Spreads @ $0.74 Credit.

Total Risk: This trade has a max risk of $2,130 (5 Contracts x $426).

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

1M/6M Trends: Bullish/Mildly Bullish

Technical Score: 6/10

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 that this is a CONDITIONAL trade. We will only enter the trade when the condition is met, which is IF GLD sells down to $161.50 to $160. 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

Stocks were holding recent gains through much of yesterday’s trading, but a late sell-off fueled by Amazon announcing layoffs sent the SPX down some 36 points, virtually on the low of the session. But after the close, the Berkshire Hathaway newest holdings file was released, showing a $4B investment in Taiwan Semiconductor amongst others, helping push futures higher to get back about 1/3 of what they lost yesterday (as of Monday night as I write this).

Running multiple scans yesterday that I do to come up with potential new Daily Play trade ideas yielded no help, as the price is beneath levels I really want to sell at, and are higher than support levels. Thus, we will be patient and look for opportunities that may present themselves to us if they appear at our preferred price. 

One such idea is to look for a pullback in gold (via the GLD ETF). Yesterday, we saw the cloud’s Lagging Line close right on the top of its cloud, perhaps giving an indication that it can pull back after the $100+ rally that spot gold has made in the past week. Looking at where the daily cloud top shows up for the current price (just north of $160), along with the volume distribution over the last month (shown with horizontal bars on the right side of the chart), should we see the GLD sell down to $161.50 to $160, we’ll sell the Dec. 16th $160/$155 put spread for the then bid/offer mid-price, looking for gold to bottom there and turn back higher. THIS IS A CONDITIONAL TRADE DEPENDING UPON UPCOMING PRICE ACTION AND MAY NOT BE EXECUTED.

GLD – Daily