DailyPlay – Opening Trade (MGM) Closing Trade (TMUS) – November 21, 2023

Closing Trade

• TMUS – 56.01% Gain: Buy to Close 6 Contracts (or 100% of your Contracts) Dec 15th $145/$140 Put Vertical Spreads @ $0.75 Debit. DailyPlay Portfolio: By Closing all 6 Contracts, we will be paying $450. We initially opened these 6 Contracts on Nov 2 @ $1.71 Credit. Our average gain, therefore, is $96 per contract. 

MGM Bearish Opening Trade Signal

View MGM Trade

Strategy Details

Strategy: Short Call Vertical Spread

Direction: Bearish

Details: Sell to Open 10 Contracts Dec 29th $40/$43 Call Vertical Spreads @ $1.20 Credit per contract.

Total Risk: This trade has a max risk of $1,800 (10 Contracts x $180) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $180 to select the # contracts for your portfolio.

Counter Trend Signal: This is a bearish trade on a stock that is bullish and expected to pull back lower.

1M/6M Trends: Bullish/Neutral

Relative Strength: 6/10

OptionsPlay Score: 100

Stop Loss: @ $2.42 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 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

MGM has been bullish recently, partly due to the Formula 1 race in Las Vegas which boosted its income and share price. Equities in general have also seen a rally over the same period, but this rally has run out of steam as the S&P500 topped out at 4560.

With MGM trading into an area of resistance between $40 and $41 and it being in an overbought condition, we expect to see a pullback from this level. We would therefore make use of this opportunity to collect a premium on a bearish Credit Spread. Let’s look to Sell the Dec 29 $40/$43 Call Vertical Spread at $1.20 Credit per share. With a hypothetical portfolio of $100,000, I recommend risking 2% of the portfolio’s value to this trade, which is 10 Contracts for a risk of $1,800. We will set a stop loss on this spread at around 100% loss to the value of the premium paid @ $2.42 Debit.

MGM – Daily