DailyPlay & Taking Partial profits (LOW, XLU) – April 5th

View LOW Trade

Taking Partial Profits

• XLU: 116% Gain: Sell to close May 20, 2022 $73/$78 Call Vertical @ $3.09 Credit. Close half of this position. For example, if 10 contracts were opened for this trade, we recommend closing 5 contracts. 

LOW Bullish Opening Trade Signal

Strategy Details

Strategy: Call Debit Spread

Strategy Direction: Bullish

Details: Buy May 13, 2022 $205/$220 Call Vertical @ $5.02 Debit

Counter Trend Signal: This is a bullish strategy on a stock or ETF that is experiencing a bearish trend. 

1M/6M Trends: Bearish/Bearish

Technical Score: 4/10

OptionsPlay Score: 109

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.

Investment Rationale

LOW made a daily Setup -9 late last week and continues to hold that level as well as the prior bottoms from last September near $200 (the horizontal green-colored line). This is a key area of support (or the stock could fall to fill the unfilled gap from last August under $190). I’m purposely choosing the weekly May 13th expiration rather than the standard monthly May 20th one for two reasons: 1) they have $5 strike increments and the monthly doesn’t, and 2) LOW reports their quarterly earnings on May 18th (meaning that we would be paying extra for May 20th strikes to include the potential exposure the seller would have to be short into earnings). So we will look for a moderate gain this month to buy the May 13th $205 and sell the May 13th $220 against for a net debit of $5.02 based upon Monday’s closing mid prices.