DailyPlay – Opening Trade (UAL) Closing Trade (SBUX) – November 3, 2023

Closing Trade

• SBUX – 124.89% Loss: Buy to Close 10 Contracts (or 100% of your Contracts) Nov 24th $92/$98 Call Vertical Spreads @ $5.24 Debit. DailyPlay Portfolio: By Closing all 10 Contracts, we will be paying $5,240. We initially opened 5 of these Contracts on Oct 13 @ $2.22 Credit and then another 5 Contracts on Oct 27 @ $2.44 Credit. Our average loss, therefore, is $291 per contract. 

UAL Bullish Opening Trade Signal

View UAL Trade

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish

Details: Buy to Open 10 Contracts Dec 15th $35/$40 Call Vertical Spreads @ $1.95 Debit per contract.

Total Risk: This trade has a max risk of $1,950 (10 Contracts x $195) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $195 to select the # contracts for your portfolio.

Counter Trend Signal: This is a bullish trade on a stock that is bouncing higher off support.

1M/6M Trends: Bearish/Bearish

Relative Strength: 2/10

OptionsPlay Score: 99

Stop Loss: @ $1.00 Credit. (50% loss on premium paid)

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 Thursday’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. 

Investment Rationale

Markets have roared back to life after Powell’s comments yesterday which has been interpreted as a dovish pivot. Let’s review a couple of our positions. SBUX earnings came in better than expected and provided strong guidance and has now moved substantially higher today. We must manage this by simply closing out the entire position. Our UAL position has started to take off from the lows and working towards our $41 target. I want to take this opportunity to add further exposure to this position. I’m looking to purchase 10 more contracts of the Dec $35/40 Call Vertical @ $1.95 Debit. With a hypothetical portfolio of $100,000, this would be adding 2% of the portfolio’s value, which is 10 Contracts for a risk of $1,950. We will move our stop loss on the put spread to around 50% of the premium paid @ $1.00 Credit on the full 23 contracts.