DailyPlay – Opening Trade (MA) – November 9, 2023

MA Bearish Opening Trade Signal

View MA Trade

Strategy Details

Strategy: Short Call Vertical Spread

Direction: Bearish

Details: Sell to Open 2 Contracts Dec 22nd $390/$405 Call Vertical Spreads @ $6.77 Credit per contract.

Total Risk: This trade has a max risk of $1,646 (2 Contracts x $823) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $823 to select the # contracts for your portfolio.

Counter Trend Signal: This is a bearish trade on a stock that is neutral.

1M/6M Trends: Neutral/Neutral

Relative Strength: 6/10

OptionsPlay Score: 110

Stop Loss: @ $13.50 Debit. (100% 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 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 equity markets take a pause at these major resistance levels while 10-year yields stabilize around the 4.5% mark, the risk/reward favors bearish exposure. One opportunity that has remained my radar is MA. It recently broke below its key $390 support level, and now retesting it as resistance, providing an attractive risk/reward for short exposure. MA trades at over 27x forward earnings while expecting a decent 17% EPS growth, which is on the rich side. Moreover, MA has continued to underperform its sector since the beginning of 2023 and at risk of further weakness from these resistance levels. Despite IV Rank in the bottom 10%, the options skew still favors selling a call credit spread. I’m looking to sell the Dec 22nd $390/$405 Call Vertical @ $6.78 Credit. With a hypothetical portfolio of $100,000, I recommend risking 2% of the portfolio’s value to this trade, which is 2 Contracts for a risk of $1,646. We will set a stop loss on the put spread at around 100% of the premium collected @ $13.50 Debit.

MA – Daily