DailyPlay – Opening Trade (SQ) – October 23, 2023

SQ Bullish Opening Trade Signal

Investment Rationale

Block Inc. (SQ) has recently broken out of its trading range with strong momentum, continuing to outperform the S&P 500 and signaling potential upside toward our $80 target. Currently trading between $62.50 and $85, SQ is modestly undervalued at 16x forward earnings compared to the industry average of 27x. While its low-margin business model impacts profitability, SQ’s rapid growth suggests it could reach a more reasonable valuation of 19-20x forward earnings. With increasing investor interest, the stock shows strong growth potential. The company’s earnings are expected on November 7th, and there is a good possibility that we will remain in this position through the report.

SQ – Daily

Trade Details

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish Debit Spread

Details: Buy to Open 5 SQ Nov 22 $70/$80 Call Vertical Spreads @ $4.44 Debit per Contract.

Total Risk: This trade has a max risk of $2,220 (5 Contracts x $444) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $444 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bullish trade on a stock that is expected to continue its bullish trajectory.

1M/6M Trends: Bullish/Bullish

Relative Strength: 4/10

OptionsPlay Score: 93

Stop Loss: @ $2.22 (50% loss of premium)

View SQ 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 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. 

View SQ Trade