DailyPlay – Opening Trade (ACN) – November 29, 2023

ACN Bearish Opening Trade Signal

View ACN Trade

Strategy Details

Strategy: Short Call Vertical Spread

Direction: Bearish

Details: Sell to Open 1 Contract Jan 19th $335/$355 Call Vertical Spread @ $7.30 Credit per contract.

Total Risk: This trade has a max risk of $1,270 (1 Contract x $1,270) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $1,270 to select the # contracts for your portfolio.

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

1M/6M Trends: Bullish/Bullish

Relative Strength: 8/10

OptionsPlay Score: 99

Stop Loss: @ $14.60 Debit. (100% loss to the value of premium received)

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 Tuesday’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

With the equity market being bullish but also trading at major areas of resistance, we believe that a pullback can be expected. Some equities have also seen recent rallies, of which ACN is one. ACN is currently trading around resistance at $335, from where a pullback can be expected.

We will make use of this opportunity to collect a premium. We will, therefore, play a Credit Spread which collects 36.5% of the width of this spread. Let’s Sell to Open a Jan 19th $335/$355 Call Vertical Spread at $7.30 Credit per contract. With a hypothetical portfolio of $100,000, I recommend risking 2% of the portfolio’s value to this trade, which is 1 Contract for a risk of $1,270 We will set a stop loss on this spread at around 100% of the value of the premium received @ $14.60 Debit.

ACN – Daily