DailyPlay – Conditional Opening Trade (ARKG) – May 17, 2023

ARKG Conditional Bearish Opening Trade Signal

View ARKG Trade

Strategy Details

Strategy: Short Call Vertical Spread

Direction: Bearish

Details: Sell to Open 36 Contracts June 16th 30/31 Call Vertical Spreads @ a current cost basis of $0.46 Credit per contract.

Total Risk: Based on the current cost basis this trade has a max risk of $1,944 (36 Contracts x $54) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $54 to select the # contracts for your portfolio.

Counter Trend Signal: This stock is bullish and is expected to pull back from this level.

1M/6M Trends: Bullish/Neutral

Technical Score: 3/10

OptionsPlay Score: 111

Condition: Open this trade when ARKG trades between $30 to $30.25 anytime this week.

Investment Rationale

Home Depot’s less than stellar forward guidance pulled stocks lower on Tuesday, as upped fears of a slowing consumer and economy led bidders to shy away, making sellers become more aggressive to get their orders filled – and netting out to a loss of some 26 SPX points for a close at 4110. The clock is also ticking down on the debt ceiling debate, with just 15 days to go  (including weekends) for Congress to get their act together to stave off a US default on monies they owe to creditors and government employees.

EBAY got hit for a 4.7% loss yesterday, turning what had been a winning trade into a current losing one. It happened to have marked a daily -13 on Tuesday, too, so we’ll see if this gets a bounce from it to look to reduce our position in coming days. I’d take half off on a rally to near $44.

EBAY – Daily

We’ll still look to sell the June 9th SLV $22.50$23.50 call spread if SLV rallies up to $22.35 to $22.50 area anytime this week.

SLV – Daily

For a new idea, I found a Cathy Wood fund (ARKG) that has continually failed over the past month at its bullish Propulsion Momentum level at $31.14. Yesterday it fell well more than the market was down, so we’ll look to sell June 16th $30/$31 call spread into a minor rally in the stock up $30 to $30.25 any day this week. That should get us near 45% credit of the strike differential. I’ll look for the stock to fall to $28 – the bottom of its recent range. We’ll stop ourselves out on any daily close  above $31.35.

ARKG – Daily