DailyPlay – Opening Trade (SBUX) – July 7, 2023

SBUX Bearish Opening Trade Signal

View SBUX Trade

Strategy Details

Strategy: Long Put

Direction: Bearish

Details: Buy to Open 4 Contracts Aug 25th $100 Puts @ $5.60 Debit per contract.

Total Risk: This trade has a max risk of $2,240 (4 Contracts x $560) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $560 to select the # shares for your portfolio.

Trend Continuation Signal: This stock is in a bearish trend and further downside is expected as it broke below a key support level.

1M/6M Trends: Bearish/Bearish

Technical Score: 3/10

OptionsPlay Score: 94

Stop Loss: @ $3.00 Credit (50% loss).

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 Thursday’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

I hope that many of you reading this were able to attend my session last night on How to Grow a Trading Account (click on the image above to open the recording), or are able to watch the recording today. We are going to adjust our SBUX trade exactly as we had laid out in the session last night as to how we grow our DailyPlay portfolio in the long run. As SBUX breaks below a key support level and starts to show that our outlook is correct, we are taking this opportunity to add to this position instead of taking profits. You may be included to take some profit here, but that is no way to grow an account, we would rather risk this small win back into a loser if it means we have the chance to hit a home run. It’s uncomfortable and painful to potentially see a win turn back into a loss when you had a chance to take profits, but that’s a counterintuitive requirement of profitable trading. We are going to purchase another 2% of our account on more SBUX puts. Buy 4 Contracts Aug $100 Puts @ $5.60 Debit. However, we are also going to move our stops from the original $2.00 up to $3.00. This would risk a total of $1,200 on the entire 10 contracts if we end up being stopped out with unlimited downside exposure on double our initial trade size. 

SBUX – Daily