DailyPlay – Opening Trade (GOOGL) Closing Trade (INDA) – October 24, 2023

Closing Trade

• INDA – 47.75% Loss: Sell to Close 20 Contracts (or 100% of your Contracts) Dec 15th $44 Calls @ $0.93 Credit. DailyPlay  Portfolio: By Closing all 20 Contracts, we will receive $1,860. We initially opened these 20 Contracts on Oct 11 @ $1.63 Debit. Our average loss, therefore, is $70 per contract. 

GOOGL Bullish Opening Trade Signal

View GOOGL Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 4 Contracts Dec 1st $136/$128 Put Vertical Spreads @ $3.24 Credit per contract.

Total Risk: This trade has a max risk of $1,904 (4 Contracts x $476) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $476 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a Bullish trade on a stock that is bullish.

1M/6M Trends: Bullish/Bullish

Relative Strength: 10/10

OptionsPlay Score: 98

Stop Loss: @ $6.50 Debit. (100% 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 Monday’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

Despite having a strong view that India will maintain its outperformance in the APAC region, our position timing has not worked out as well. After rolling our Oct calls to the Dec $44 call options, we are down about 50% of the premium on those new calls. As a rule of thumb, we must reduce exposure when trades are not working out as expected. I suggest that we should close out the full INDA position at this point. We will continue to hold onto a few positions going into earnings this afternoon with MSFT and SNAP reporting after today’s close. 

Alphabet reports later this week, and out of the major tech names, it’s the one that trades at a reasonable valuation. Alphabet continues to trend higher and now targets the $150 all-time highs. Additionally, GOOGL has continued to outperform its sector since the start of the 2nd half of this year and primed for a solid earnings report. Trading at 20x forward earnings, it is trading at an incredibly reasonable valuation, when you consider the 18% EPS growth that’s expected for next year. With implied vol elevated, here is an opportunity to earn yield by selling the Dec 1st $136/128 Put Vertical @ $3.24. With a hypothetical portfolio of $100,000, I recommend risking 2% of the portfolio’s value to this roll, which is 4 Contracts for a risk of $1,904. We will set a stop loss on the put spread at around 100% of the premium collected @ $6.50 Debit.