DailyPlay – Opening Trade (RCL) – October 18, 2023

RCL Bearish Opening Trade Signal

View RCL Trade

Strategy Details

Strategy: Long Put Vertical Spread

Direction: Bearish

Details: Buy to Open 4 Contracts Nov 17th $90/$75 Put Vertical Spreads @ $5.26 Debit per contract.

Total Risk: This trade has a max risk of $2,104 (4 Contracts x $526) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $526 to select the # contracts for your portfolio.

This trade has a max risk of $2,104 (4 Contracts x $526) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $526 to select the # contracts for your portfolio.

1M/6M Trends: Bearish/Bearish

Relative Strength: 10/10

OptionsPlay Score: 133

Stop Loss: @ $2.60 Credit. (50% loss of premium paid)

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

10-year yields closed above 4.8% yesterday to a new decade high. This environment continues to pressure high valuation stocks such as AAPL, who’s bonds now yield more than 5% while the stock yields just over 0.5%. This is why we maintain bearish exposure in tech stock such as AAPL and MSFT and continue to seek bearish opportunties. One such position, RCL has yielded gains and I believe has further downside. We should take this opportunity to add more exposure in this position and potentially hit a home run on further downside to our $78 target. I’m looking to buy 4 more contracts of the Nov $90/75 Put Vertical @ $5.26 Debit, which is risking approximately another 2% of our total hypothetical portfolio’s value of $100,000. We move our stop loss to around 50% of the premium paid @ $2.60 Credit on the entire position of 9 contracts. 

RCL – Daily