DailyPlay – Conditional Opening Trades (SPY) Partial Closing Trade (TLT) – January 9, 2023

Partial Closing Trade

• TLT – 64.32% Gain: Buy to Close 2 Contracts Feb 17th $100/$95 Put Vertical Spreads @ $0.66 Debit. DailyPlay Portfolio: By Closing 2 of the 6 Contracts, we will be paying $132.

SPY Conditional Bullish Opening Trades

SPY Conditional Trade 1

View SPY Trade 1

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish

Details: Buy to Open 1 Contract Feb 10th $387/$405 Call Vertical Spread @ $7.72 Debit.

Total Risk: This trade has a max risk of $772 (1 Contract x $772).

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: 91

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. The condition that has to be met, before you enter this bullish trade is if we see a pullback to between  $387.70 and $387. Therefore, the credit received for this trade will be different than what we are showing here, which is only acting as a guideline. 

SPY Conditional Trade 2

View SPY Trade 2

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish

Details: Buy to Open 1 Contract Feb 10th $384/$405 Call Vertical Spread @ $9.55 Debit.

Total Risk: This trade has a max risk of $955 (1 Contract x $955).

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 that this is a Conditional trade. The condition that has to be met, before you enter this bullish trade is if we see a pullback to just north of $384. Therefore, the credit received for this trade will be different than what we are showing here, which is only acting as a guideline. 

Investment Rationale

With stocks bouncing sharply on Friday and remaining above the SPX daily (3814) and weekly (3769) bearish Propulsion Momentum levels without any qualified and confirm closes beneath them, respectively, in the past 2+ weeks, Friday’s 86-point SPX gain keeps the early-2023 picture bullish.

When I look more closely into Friday’s rally in the SPY – as well as the past 15 trading days since price gapped down on Dec. 16th – I see three distinct areas of support that I can discern from both Friday and then collectively since mid-December: They are $387.70 to $387; just north of $384; and $379.50 (the latter being the heaviest-volumed price of all SPY trading over the past three weeks and right by Friday’s low).

As Friday only marked a Setup +1 count – suggesting that we’re not near upside exhaustion from timing models along with a VIX right near 21 – we’ll look to get long two separate 1% portfolio positions on a pullback in price to the first and second of the above written support areas:  1) a Feb. 10th $387/$405 call spread, and then, 2) a Feb. 10th $384/$405 call spread. Each of these spreads are to be entered when price declines to near the first of the two strike prices at what then are their real-time trading mid-prices.

SPY – Daily

Elsewhere, we had on a very good long natural gas call spread in UNG that then collapsed in price as natgas lost over one-third of its value very quickly. Fortunately, we previously sold half the spreads for good profits, greatly reduce the loss on the other half which will go out worthless later this week.

The short Feb. 6th TLT $100/$95 put call is working nicely in just the few days since we put it on last week. We’re up 64% on it right now, so let’s remove 2 of the 6 today.