DailyPlay – Adjusting Trade (SHOP) – January 6, 2025

SHOP Bullish Trade Adjustment

Investment Rationale

Shopify (SHOP) – We are maintaining our bullish outlook following the gap move higher to a new 52-week high a little while back and continue to hold a longer-term target of $140. After a recent pullback in the stock’s price, we will roll the short option of our long call vertical spread to capture the gain on the current short position and bring in additional premium, as the expiration date is quickly approaching (11 DTE).

We will adjust this position by closing the short leg and selling to open another leg with a lower strike price but the same expiration, for a net credit to the position. This adjustment will lower our cost basis but at the detriment of reducing our maximum potential profit if the upside momentum from yesterday continues. Below is the current position breakdown with the individual legs listed.

Original Position:

• Long 3 Jan 17, 2025 $105 Calls
• Short 3 Jan 17, 2025 $125 Calls
• Cost Basis $6.39 Net Debit

Trade Details

Strategy Details

Strategy: Adjustment of a bullish Call Vertical Spread

Direction: Resulting in a new bullish Call Vertical Spread

Details: Buy to Close 3 Contracts Jan 17, 2025 $125 Call and Sell to Open 3 Contracts Jan 17, 2025 $115 Call @ 1.06 net Credit, or $106 per 1×1 roll ($1.06 x 100). The total net Credit received for rolling these 3 call contracts is $318 ($1.06 x 100 x 3) This roll establishes a new Bullish Call Vertical Spread.

Resulting Position after Roll/Adjustment:

• Long 3 Jan 17, 2025 $105 Call
• Short 3 Jan 17, 2025 $115 Call
• Cost Basis $5.37 Net Debit

Adjusting the Trade

Use the following details to Adjust the SHOP trade on your trading platform.

PLEASE NOTE that these prices above are based on Friday’s closing prices.