DailyPlay – Opening Trade (WHR) – July 21, 2023

WHR Bearish Opening Trade Signal

View WHR Trade

Strategy Details

Strategy: Long Put

Direction: Bearish

Details: Buy to Open 4 Contracts Aug 11th $149 Put @ $4.65 Debit per contract.

Total Risk: This trade has a max risk of $1,860 (4 Contracts x $465) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $465 to select the # shares for your portfolio.

Counter Trend Signal: This stock has been bullish but broke below an uptrend channel.

1M/6M Trends: Bullish/Bullish

Technical Score: 7/10

OptionsPlay Score: 87

Stop Loss: @ $2.33 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

After closing out 2 of our earnings play yesterday for a profit, let’s look at other opportunities for next week. During our Earnings Education session, we reviewed metrics that showed the average beats rising less than 1% higher, but misses declined by more than 5% on average. With this data, we prefer to seek bearish opportunities this earnings season. Reviewing the OptionsPlay’s Earnings Calendar we see WHR reports after the close on Monday. WHR recently rallied up to its key $160 resistance level and failed to break higher. Moreover, its relative chart to the consumer discretionary sector is poor and trading near 52-week lows, suggesting potential weakness ahead. And Electrolux’s earnings announcement yesterday sent the stock down 20%, warning us of significant weakness from consumer appliance purchases. With CPI appliance prices lower in Q2 by 10%, we expect both revenue and margin compression from companies such as WHR. To take advantage of a potential move lower we are using a simple put option to capture significant downside. Buy to Open Aug 11 $149 Puts for $4.65 Debit. With a hypothetical portfolio of $100,000 we recommend risking 2% of it on this trade, which is 4 Contracts for $1,860 in total risk. Set a stop loss on the put at 50% of the premium paid, about $2.30 Credit. 

WHR  – Daily