DailyPlay – Opening Trade (MCD) – October 19, 2023

MCD Bullish Opening Trade Signal

View MCD Trade

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish

Details:Buy to Open 2 Contracts Dec 15th $250/$270 Call Vertical Spreads @ $9.52 Debit per contract.

Total Risk: This trade has a max risk of $1,904 (2 Contracts x $952) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $952 to select the # contracts for your portfolio.

Counter Trend Signal: This is a bullish trade on a stock that is in a bearish trend and expected to bounce higher.

1M/6M Trends: Bearish/Bearish

Relative Strength: 4/10

OptionsPlay Score: 94

Stop Loss: @ $4.75 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 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 markets continue to trade in a rangebound manner, it may feel difficult to navigate the current trends. I wanted to remind members of how we help you become a profitable trader when markets seem challenging to navigate. It’s summed up in two simple yet emotionally challenging rules to implement. We must ensure that when trades do not pan out as expected, we accept them quickly and keep losses small, while fighting the urge to take every profit that comes our way. Instead, we must add face the uncomfortable nature of adding more exposure when the market proves our directional view correct such as in MCD and RCL. We must remember that even when a small percentage of our positions are profitable and we potentially hit a home run with them by adding exposure, they can easily offset a larger number of smaller losses.

To this effect, we are going to add further exposure as our outlook that MCD could bounce quickly has started to work and continue to monitor the # of positions with unrealized losses for places to reduce exposure. Let’s buy 2 more contracts of MCD Dec 15 $250/$270 Call Vertical @ $9.52 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 @ $4.75 Credit on the entire position of 5 contracts. 

MCD – Daily