DailyPlay – Opening Trade (TMUS) Closing Trades (RCL, SNAP) – October 30, 2023

Closing Trade

• RCL – 34.19% Gain: Sell to Close 4 Contracts (or 100% of your Contracts) Nov 17th $90/$75 Put Vertical Spreads @ $7.06 Credit. DailyPlay Portfolio: By Closing all 4 Contracts, we will be receiving $2,824. We initially opened these 4 Contracts on Oct 18 @ $5.26 Debit. Our average gain, therefore, is $180 per contract. 
• SNAP – 42.59% Loss: Sell to Close 38 Contracts (or 100% of your Contracts) Nov 17th $9/$7 Put Vertical Spreads @ $0.31 Credit. DailyPlay Portfolio: By Closing all 38 Contracts, we will be receiving $1,178. We initially opened these 38 Contracts on Oct 20 @ $0.54 Debit. Our average loss, therefore, is $23 per contract. 

TMUS Bullish Opening Trade Signal

View TMUS Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 6 Contracts Dec 15th $140/$135 Put Vertical Spreads @ $1.81 Credit per contract.

Total Risk: This trade has a max risk of $1,914 (6 Contracts x $319) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $319 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bullish trade on a stock that is neutral to bullish

1M/6M Trends: Neutral/Mildly Bullish

Relative Strength: 7/10

OptionsPlay Score: 89

Stop Loss: @ $3.60 Debit. (100% loss).

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 Friday’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

Both the S&P and Nasdaq indices printed fresh recent lows last week below key major support levels. However, there are signs that the sell off that now bleeds into all sectors are showing some signs of exhaustion. Lower low’s in price are no longer confirmed by lower lows in momentum, this leads to a higher probability of a bounce in equities. The question is how far? My view is that this is an opportunity to start reducing bearish exposure, add neutral to bullish exposure in the short run and see. With this in mind, we are going to close out our RCL (which intra-week reached our $78.50 target) and SNAP positions, while adding TMUS to our DailyPlay portfolio. After reporting strong guidance on earnings last week, TMUS’s recent revisit of its $140 support level provides a strong risk/reward entry for bullish exposure. It’s strong free cash-flow and low churn rates provides safety for investors as the outlook for consumers continue to look more uncertain. I’m looking to sell the Dec $140/$135 Put Vertical @ $1.81 Credit. With a hypothetical portfolio of $100,000, I recommend risking 2% of the portfolio’s value to this roll, which is 6 Contracts for a risk of $1,914. We will set a stop loss on the put spread at around 100% of the premium collected @ $3.60 Debit.

TMUS – Daily