DailyPlay – Opening Trade (SBUX) – October 27, 2023

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 @ $2.44 Credit per contract.

Total Risk: This trade has a max risk of $1,780 (5 Contracts x $356) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $356 to select the # contracts for your portfolio.

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

1M/6M Trends: Bearish/Bearish

Relative Strength: 4/10

OptionsPlay Score: 100

Stop Loss: @ $5.00 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 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

The S&P 500 and the Nasdaq-100 have now both broken its major support levels at $4220 and $14,500 yesterday. This is a bearish signal that could open up further downside in equities. We currently have two large bearish positions in AAPL and RCL that are profitable with more downside potential. One position that is near breakeven but has further potential is SBUX. I’m going to suggest adding further bearish exposure in SBUX here by selling another 5 contracts of the Nov 24 $92/98 Call Vertical @ $2.44 Credit. This is risking roughly another 2% of our hypothetical $100,000 portfolio. We will move our stops on the call spread to around 100% of the premium collected @ $5.00 Debit. 

SBUX – Daily