DailyPlay – Adjusting Trade (DXCM) Closing Trade (AAPL) – February 12, 2025

Closing Trade

• AAPL – 81% loss: Buy to Close 3 Contracts (or 100% of your Contracts) Feb 28 $225/$235 Call Vertical Spreads @ $6.40 Debit. DailyPlay Portfolio:  By Closing all 3 Contracts, we will pay $1,920. We initially opened these Contracts on Jan 22 @ $3.53 Credit. Our loss, therefore, is $287 per contract.

DXCM Bullish Adjusting Trade Signal

Investment Rationale

DexCom, Inc. (DXCM) – We currently hold a long call position in the Daily Play portfolio and are selling an option to adjust the position, creating a bull call vertical spread ahead of DexCom’s earnings announcement on Thursday, February 13, after the close. Recently, our short option in the diagonal spread expired, benefiting our position by reducing the cost basis of the current long option to $3.25.

We still consider DXCM to be fundamentally undervalued despite trading at a premium relative to its peers, as its valuation is supported by stronger growth and profitability metrics. The company has a forward price-to-earnings ratio of 43.54, compared to the industry average of 24.87. Its expected earnings per share growth is 23.36%, significantly higher than the industry average of 8.70%. DexCom’s expected revenue growth stands at 13.77%, compared to 6.34% for the industry. Additionally, the company’s net margins are 17.22%, outperforming the industry average of 14.13%.

• Current Position: Long 7 Feb 21, 2025, 88 Calls
• Days to Expiration (DTE): 10 days
• Current Cost Basis: $3.25 or $2,275 total for the 7 contracts (3.25 x 7 x 100

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. 

Trade Details

Strategy Details

Strategy: Adjustment of a Bullish Long Call

Direction: Resulting in a new Bullish Call Vertical Spread

Details: Sell to Open 7 Contracts Feb 21 $92 Call @ a $1.75 Credit, or  $1,225 ($1.75 x 7 x 100). This sale establishes a new Bull Call Vertical Spread in DXCM.

Resulting Position:

• Long: 7 Feb 21, 2025, 88 Calls
• Short: 7 Feb 21, 2025, 92 Calls

Based on a $1.75 fill for the short contract, the new cost basis is calculated as follows:

• New Cost Basis per Contract: $3.25 – $1.75 = $1.50
• Total Cost Basis for 7×7 Spread: $1,050 ($1.50 x 7 x 100)

1M/6M Trends: Bullish/Neutral

Relative Strength: 9/10

View DXCM Trade