DailyPlay – Closing Trade (FSLR) Partial Closing Trade (MCK) – April 18, 2023

Closing Trade

• FSLR – 60.96% Loss: Buy to Close 3 Contracts (or 100% of your Contracts) April 28th $210/$220 Call Vertical Spreads @ $5.73 Debit. DailyPlay Portfolio: By Closing all 3 Contracts, we will be paying $1,719.

Partial Closing Trade

• MCK – 18.24% Gain: Buy to Close 1 Contract (or 25% of your Contracts) May 19th $370/$380 Call Vertical Spreads @ $3.80 Debit. DailyPlay Portfolio: By Closing 1 of the 4 Contracts, we will be paying $380.

LIT Bullish Opening Trade Signal

View LIT Trade

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish

Details: Buy to Open 14 Contracts May 19th $64/$69 Call Vertical Spreads @ $1.43 Debit per contract.

Total Risk: This trade has a max risk of $1,988 (14 Contracts x $142) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $142 to select the # contracts for your portfolio.

Trend Continuation Signal: This stock has recently turned mildly bullish, and is expected to continue this trend.

1M/6M Trends: Mildly Bullish/Bearish

Technical Score: 4/10

OptionsPlay Score: 103

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 Monday’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

A second half of the day rally on Monday gave the SPX a close of 4151 – just four points beneath the key 4155 level that we’ve been focused on for Friday’s close. And the more above it that it hurdles that level, the more you’ll likely see shorts being forced to cover their positions.

Our portfolio positions have mostly done well, as we’ve got a more bullishly skewed one. However, FSLR has moved up sharply the past few days, taking it right back to the top of its range (and with a slightly higher high and the best close of the whole upmove). Let’s look to cover this trade today and take our loss.

FSLR – Daily

With MCK having gotten close or even traded down to the bearish Propulsion Momentum level of $358.68 but not being able to get beneath it, let’s take one 1 of four bearish call spreads off today, and now stop yourself out on the balance if this rallies back up to your entry price being the mid- price of the spread. For us that’s $4.65, but your’s may be different.

MCK – Daily

In our long USO $71/$77 call spread, we have plenty of time till expiration.  However, if the mid- price gets back down to our entry price of $1.90, sell one of two remaining spreads. That stop is in effect for any day going forward.  Tomorrow is the weekly oil inventory report. An unexpected bullish number could end up crushing shorts.

USO – Daily

Lastly, here’s a new play that I’d more prefer to do as a short put spread than a long call spread, but selling the put spread doesn’t yield enough credit for me to do it (i.e., 35% of the strike differential I was looking at). Therefore, let’s look to get long the LIT May 19th $64/$69 call spread for a cost of $1.43 based on yesterday’s closing mid, representing some 29% of the strike differential. Notice the effectiveness over the past six months on the daily chart of the DeMark 9s and 13s, as well as the recent low right near the bearish Propulsion Momentum level of $60.19 that could not be downside breached.

LIT – Daily