DailyPlay – Opening Trade (LYFT) – March 16, 2023

LTFT Bullish Opening Trade Signal

View LYFT Trade

Strategy Details

Strategy: Short Put

Direction: Bullish

Details: Sell to Open 2 Contracts April 14th $9 Put @ $0.67 Credit per contract.

Total Risk: This trade has a max risk of $1,666 (2 Contracts x $833) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $833 to select the # contracts for your portfolio.

Counter Trend Signal: This stock has been trading lower and has reached an over-sold condition, from where a bounce higher is expected.

1M/6M Trends: Bearish/Bearish

Technical Score: 1/10

OptionsPlay Score: 100

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that whenever there is a multi-leg option strategy, it should be entered as a single trade. 

Please note that these prices are based on Wednesday’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. 

Investment Rationale

Stocks closed lower yesterday, with the SPX down 27 pts. to 3891.  But they only lost 1/3 of how low they went at yesterday’s midday bottom. That suggests there’s some buying coming in to offset the selling, and of most interest to me, is that after three sessions this week, we’ve only seen last Friday’s close exceeded by six points on just one of those closes. I continue to respect the 3864 weekly bearish Propulsion Momentum level, and if we don’t see a down close on this Friday relative to last Friday’s of 3864, then the odds get better that we could see a bounce from this area – one that could take the SPX back up to test the lower of two trendlines drawn from the Feb. high (about 100 points above current price).

As any of you know who are trading daily, market volatility has dramatically increased in the past several sessions, and trying to get a handle on its bigger move is no piece of cake. I still think that it will ultimately be downward earnings revisions that helps take the market lower from this range, but the day-to-day see-saw movement is going to truly test your skills.

We’ve got three spread positions on that expire Friday, so I suggest you get out of them today or tomorrow morning unless you plan on dealing with being exercised.  These include:

1. Short 2 SPOT $125/$130 call spreads. The stock closed at $125.65 on Wednesday, and we’re down 4.7% on these final two.
2. Long 2 GLD $168.5/$176.5 call spreads. The stock closes at $178.21 on Wednesday, and we’re up 205% on these final two.
3. Short 5 ABBV $145/$150$160/$165 iron condors. The stock closed at $154.06 on Wednesday, and we’re up 79% on these final 5.

Here’s an idea to consider for those willing to potentially get long a name if exercised in 30 days, and if not, collecting the premium. Let’s look at both the daily and monthly charts of LYFT. I see a potential bounce coming from the bottom of a well-established channel. Secondly, the monthly chart shows its first-ever -13 signal (this is an Aggressive Combo one). Combined, it gives me a sense that this is not a bad place to put on a bullish strategy, especially for the longer term if need be and if willing to buy the stock. Using the April 14th $9 strike, you can collect $67 per option sold, effectively making your purchase price $8.33 if exercised.

LYFT – Daily

LYFT – Monthly