DailyPlay – Opening Trade (SHOP) Closing Trades (ADBE, MAR) – September 23, 2024

Closing Trades

• ADBE – 101.90% loss: Buy to Close 1 Contract (or 100% of your Contracts) Oct 25th $570/$530 Put Vertical Spread @ $29.68 Debit. DailyPlay Portfolio:  By Closing this Contract, we will pay $2,968. We initially opened this Contract on September 11 @ $14.70 Credit. Our loss, therefore, is $1,498.
• MAR – 126.14% loss: Buy to Close 4 Contracts (or 100% of your Contracts) Oct 4th $225/$235 Call Vertical Spreads @ $9.95 Debit. DailyPlay Portfolio:  By Closing these 4 Contracts, we will pay $3,980. We initially opened these 4 Contracts on August 27 @ $4.40 Credit. Our loss, therefore, is $555 per Contract.

SHOP Bullish Opening Trade Signal

Investment Rationale

Shopify (SHOP) recently broke out of its trading range and has since pulled back to the $67 support level, offering an attractive risk/reward opportunity for bullish exposure. With an EV-to-forward revenue ratio of 8x, in line with the industry average, Shopify’s valuation is well-supported by its significantly higher earnings per share (EPS) growth of 185% and revenue growth of 21%, compared to the industry. This makes the stock appear fairly valued. As the company is set to announce earnings in early November, we have factored this upcoming event into the selection of our option strategy.

SHOP – Daily

Trade Details

Strategy Details

Strategy: Long Call Calendar Spread

Direction: Bullish Long Call Calendar

Details: Buy to Open 7 SHOP Oct 18, 2024/Nov 15, 2024 $85 Call Calendar @ $283.00 Debit per Contract.

Total Risk: This trade has a max risk of $283 (7 Contract x $1,981) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $298 to select the # contracts for your portfolio.

Trend Continuation Signal: Momentum is bullish on SHOP following its recent breakout above the trading range, with expectations that the upward trend will continue.

1M/6M Trends: Bullish/Bullish

Relative Strength: 5/10

OptionsPlay Score: 59

Stop Loss: @ $142 (50% loss to the value of premium)

View SHOP Trade

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. 

View SHOP Trade