DailyPlay – Opening Trade (SBUX) Closing Trade (SBUX) – October 13, 2023

Closing Trade

• SBUX – 31.80% Gain: Buy to Close 6 Contracts (or 100% of your Contracts) Nov 3rd $93/$99 Call Vertical Spreads @ $1.78 Debit. DailyPlay Portfolio: By Closing all 6 Contracts, we will be paying $1,068. We opened these 6 Contracts on September 22 @ $2.45 Credit. Our average gain, therefore, is $67 per contract. 

SBUX Bearish Opening Trade Signal

View SBUX Trade

Strategy Details

Strategy: Short Call Vertical Spread

Direction: Bearish

Details: Sell to Open 5 Contracts Nov 24th $92/$98 Call Vertical Spreads @ $2.22 Credit per contract..

Total Risk: This trade has a max risk of $1,890 (5 Contracts x $378) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $378 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bearish trade on a stock that is in a bearish trend.

1M/6M Trends: Bearish/Bearish

Relative Strength: 3/10

OptionsPlay Score: 99

Stop Loss: @ $4.44 Debit (100% loss of premium collected.)

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

Momentum on the rally for the S&P 500 has slowed and is now again testing its key $4300 level as support. We closely watching to see markets can hold this level to close out the week. Bulls need to hang onto this level to maintain a neutral stance on the market in order to potentially push higher. As we evaluate our portfolio, SBUX has approached the 21 day mark, which is when we need to start managing a credit spread as the Gamma risk starts to outweigh the acceleration we receive from Theta. Even though it has not quite yet reached our 50% profit target, we are going to take profits on our current position and roll this out to the Nov 24 $92/$98 Call Vertical @ $2.22 Credit. With a hypothetical portfolio of $100,000, I recommend risking 2% of the portfolio’s value to this roll, which is 5 Contracts for a risk of $1,890. We will set a stop loss on the put spread at around 100% of the premium collected @ $4.44 Debit.

SBUX – Daily