DailyPlay – Opening Trade (UPS) Closing Trade (V) – January 29, 2025

Closing Trade

• V – 42% gain: Sell to Close 2 Contracts (or 100% of your Contracts) Mar 21 $305/$325 Call Vertical Spreads @ $15.97 Credit. DailyPlay Portfolio:  By Closing both Contracts, we will receive $3,194. We initially opened these 2 Contracts on Jan 15 @ $11.24 Debit. Our gain, therefore, is $946 which is around 1% gain on our Portfolio.

UPS Bearish Opening Trade Signal

Investment Rationale

United Parcel Service, Inc. (UPS) is set to report earnings on Thursday, January 30, before the market opens. We have a bearish outlook on the company ahead of its earnings report.

Technical indicators signal caution, as UPS approaches overbought levels, with resistance around $137. The Commodity Channel Index (CCI) above +100 and an exhausted Relative Strength Index (RSI) indicate potential weakness in the stock’s recent rally.

Fundamentally, UPS faces headwinds. While estimated EPS growth of 24.92% appears strong, it follows a three-year average decline of -12.21%, raising sustainability concerns. Revenue growth of 3.44% is modest given past struggles. Performance metrics are mixed, UPS ranks in the top 25% of its industry for YTD total return (7.39%) and EPS growth (36.92%) but faces a -33.70% decline in net income and shrinking profit margins.

Valuation concerns persist, with a P/E ratio of 20.49 exceeding its three-year average. While the 4.82% dividend yield is a bright spot, declining free cash flow and rising debt levels are red flags. Any earnings disappointment could trigger downside pressure.

UPS – Daily

Trade Details

Strategy Details

Strategy: Modified Put Butterfly Spread

Direction: Bearish Modified Put Butterfly Spread

Details: Buy to Open 10 UPS Jan 31 $131/$134/$140 Put Butterfly Spreads @ $2.01 Debit per Contract.

Total Risk: This trade has a max risk of $2,010 (10 Contracts x $201) based on a hypothetical $100k portfolio risking 2%. We suggest risking only 2% of the value of your portfolio and divide it by $201 to select the # contracts for your portfolio.

Counter Trend Signal: This is a bearish trade on a stock that is expected to pull back from an area of resistance.

1M/6M Trends: Bullish/Bullish

Relative Strength: 8/10

OptionsPlay Score: 185

Stop Loss: @ $1.01 (50% loss of premium)

View UPS 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 UPS Trade