DailyPlay – Opening Trade (ICLN) – September 1, 2022

Bearish Opening Trade Signal

View ICLN Trade

Strategy Details

Strategy: Long Put Vertical Spread

Direction: Bearish

Details: Buy to Open 30 Contracts October 21, 2022 $22/$20 Put Vertical Spreads @ $0.63 Debit.

Total Risk: This trade has a max risk of $1,890 (30 Contracts x $63).

Counter Trend Signal: This is a Bearish trade on a stock that is experiencing a neutral to bullish trend. 

1M/6M Trends: Neutral/Bullish

Technical Score: 10/10

OptionsPlay Score: 135

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that if there is a multi-leg option strategy, it should be entered as a single trade. 

Please note these prices are based on the previous day’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. This will be reflected in the Portfolio tab within the OptionsPlay platform.

Investment Rationale

Equities are failing to hold any attempt of gains. In fact, I am seeing a pattern along these lines: 

1. Asia rallies
2. The US tries to hold those gains on the NY open
3. Europe closes (11:30 NY time) and then it’s sell, sell, sell

That’s not atypical for a bearish market mode.

S&P futures are down some 20 pts. (3936) as I write this Wednesday evening. The bounce I was hoping to see from SPX 4050/4023 has not materialized. The goal was to again be a seller – this time anything near 4125. It’s looking less and less like that’s in the cards.

Looking for stocks/ETFs that are showing failing rallies, I see the iShares Global Clean Energy ETF (ICLN) potentially fitting the bill. It topped right at the Risk Level ($23.83) from the daily +13 Combo upside exhaustion signal, and has traded off since then. Given the large unfilled gap that this could easily fill on continued market weakness, let’s look to buy a ICLN October 21st $22/$20 put spread for what closed yesterday at $0.625 mid.  That represents 31% of the spread differential, making for a possible max. profit of $1.375.

ICLN – Daily