DailyPlay – Opening Trade (FDX) Closing Trade (TMUS) – November 6, 2023

Closing Trade

• TMUS – 68.33% Gain: Buy to Close 6 Contracts (or 100% of your Contracts) Dec 15th $140/$135 Put Vertical Spreads @ $0.57 Debit. DailyPlay Portfolio: By Closing all 6 Contracts, we will be paying $342. We initially opened these 6 Contracts on Oct 30 @ $1.80 Credit. Our average gain, therefore, is $123 per contract. 

FDX Bearish Opening Trade Signal

View FDX Trade

Strategy Details

Strategy: Long Put Vertical Spread

Direction: Bearish

Details: Buy to Open 4 Contracts Jan 19th $240/$220 Put Vertical Spreads @ $5.18 Debit per contract.

Total Risk: This trade has a max risk of $2,068 (4 Contracts x $518) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $518 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bearish trade on a stock that is neutral and expected to continue lower.

1M/6M Trends: Neutral/Neutral

Relative Strength: 7/10

OptionsPlay Score: 135

Stop Loss: @ $2.60 Credit. (50% loss on 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 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

Equity markets staged an impressive rally last week on the back of Powell’s comments and a retreat on 10-year yields back to 4.5%. The question is how far can this rally go? Currently, we are watching the $4400-$4410 level as the major resistance level on the S&P that has to be broken for the rally to continue. Otherwise, the trend remains in a neutral to bearish trend. The risk/reward ratio after last week’s rally favors adding bearish exposure if you still believe in a bearish fundamental narrative as I do. Looking at our open positions, we are taking profits on is our initial TMUS Dec $140/135 Put Vertical that was sold for around $1.80 Credit, now trading at $0.57 Debit. We continue to hold our 2nd TMUS Dec $145/$140 Put Vertical.

Additionally one bearish position worth establishing where the risk/reward is favorable is FDX. We recently successfully close out a UPS bearish position and FDX fits the same thesis. It’s recent rally towards its $250 resistance level provides an attractive entry. With global shipping volumes continuing to decline, the fundamentals and outlook for industrial transport companies look shaky at best. I’d buy the Jan $240/$220 Put Vertical @ $5.17 Debit. 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 $2,068. We will set a stop loss on the put spread at around 50% of the premium paid @ $2.60 Credit.

FDX – Daily