DailyPlay – Opening Trade (UPS) – August 31, 2023

UPS Bearish Opening Trade Signal

View UPS Trade

Strategy Details

Strategy: Short Call Vertical Spread

Direction: Bearish

Details: Sell to Open 7 Contracts Oct 20th $175/$180 Call Vertical Spreads @ $2.06 Credit per contract.

Total Risk: This trade has a max risk of $2,058 (7 Contracts x $294) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $294 to select the # shares for your portfolio.

Trend Continuation Signal: This stock is bearish and expected to continue lower.

1M/6M Trends: Bearish/Bearish

Technical Score: 4/10

OptionsPlay Score: 108

Stop Loss: @ $4.15 Debit (100% 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 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

As we seek new opportunities in a sideways market, one idea that has generated profits for us recently has presented a new entry opportunity. Using the Credit Spread Trade Ideas scanner on the OptionsPlay platform, UPS generated a new Bearish Call Vertical trade opportunity, collecting over 40% of the vertical width by selling the Oct $175/$180 Call Vertical @ $2.06 Credit. The small rally off the $166 lows presents another opportunity to play for another leg lower on UPS. Its recent approval to lift driver wages during times of slowing shipping volumes and increased competition from Amazon suggests the risks are to the downside. With a hypothetical portfolio of $100,000, I recommend risking 2% of the portfolio’s value on this trade, which is 7 Contracts for a risk of $2,058. We will set a stop loss on the spread at 100% of the premium collected, $4.15 Debit.

UPS – Daily