DailyPlay – Opening Trade (CRWD) – September 27, 2023

CRWD Bullish Opening Trade Signal

View CRWD Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 3 Contracts Nov 3rd $160/$150 Put Vertical Spreads @ $3.73 Credit per contract.tract.

Total Risk: This trade has a max risk of $1,881 (3 Contracts x $627) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $627 to select the # shares for your portfolio.

Trend Continuation Signal: This is a bullish trade on a stock that is expected to continue higher.

1M/6M Trends: Neutral/Bullish

Technical Score: 10/10

OptionsPlay Score: 90

Stop Loss: @ $7.50 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 Tuesday’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

The bond market selloff has started to reach oversold and exhausted levels that suggest we are in for a bounce. The question is how far? With 10-year yields now firmly above 4.3%, in my opinion, we may see a shallow bounce in equities and bonds, but the economic headwinds remain. Higher oil prices are denting consumer confidence, and higher rates are pushing equity valuations lower. The real risk is if the bond market has to reprice its current expectations of rate cuts by next year. In that scenario, equity markets will have to sell off further to account for higher rates for longer. While I expect a bounce over the next few trading sessions, I believe that bounce is an opportunity to seek further downside exposure rather than a buying opportunity.

To play for a short-term tactical bounce, I’m choosing to favor profitable, high-margin momentum plays such as CRWD. Cybersecurity remains one of the fastest-growing industries within software as geopolitical tensions rise. With its recent pullback to its $160 support level, I’m looking to sell the Nov 3 $160/$150 Put Vertical @ $3.73 Credit. With a hypothetical portfolio of $100,000, I recommend risking 2% of the portfolio’s value to this trade, which is 3 Contracts for a risk of $1,881. We will set a stop loss on the put spread at 100% of the premium collected @ $7.50 Debit.

CRWD – Daily