DailyPlay – Opening Trade (SPOT) – January 06, 2026

SPOT Bearish Opening Trade Signal

Investment Rationale

Investment Thesis
Spotify Technology (SPOT) presents an attractive bearish setup as the stock struggles to sustain upside momentum following a counter-trend rally within a broader downtrend. After a strong advance earlier in the year, price action has shifted decisively, with recent rebounds failing to alter the prevailing bearish structure. Within the OptionsPlay platform, this price behavior has triggered a Bearish Trend Following alert, highlighting a favorable risk/reward window to position for renewed downside as valuation, momentum, and market structure begin to realign lower.

Technical Analysis
From a technical perspective, Spotify Technology (SPOT) remains firmly positioned within a longer-term bearish trend that developed following its mid-2025 peak near $750. The sharp rejection at that level established a clear lower high and initiated a sustained decline characterized by a series of lower highs and lower lows. Price has since rolled over decisively and continues to trade well below all major moving averages. The bearish structure was further confirmed by a death cross in early December 2025, as the 50-day moving average crossed below the 200-day. With trend alignment firmly negative, downside risk remains elevated, and the $510 area stands out as a logical downside target, aligning with prior lows and channel support.

Fundamental Analysis
While Spotify’s growth profile remains compelling, the stock continues to trade at a premium that leaves little room for execution risk, particularly in a risk-off tape. Net margins remain only modestly above peers, limiting valuation support if growth expectations cool.

• Forward PE Ratio: 39.79x vs. Industry Median 25.14x
• Expected EPS Growth: 42.57% vs. Industry Median 10.28%
• Expected Revenue Growth: 16.73% vs. Industry Median 8.47%
• Net Margins: 8.41% vs. Industry Median 7.25%

Options Trade
To express a bearish, risk-defined view, consider selling the SPOT Feb 6, 2026 $620/$635 call vertical for a credit of approximately $5.52. This structure offers a defined reward-to-risk ratio of roughly 0.58:1, with the premium collected equating to about 37% of the $15-wide spread. Maximum profit of $5.52 is achieved if SPOT remains below $620 at expiration, while maximum risk is capped at $9.48 should the stock reclaim and hold above $635. Notably, this expiration occurs ahead of Spotify’s expected earnings report in the second week of February, reducing exposure to earnings-driven volatility while maintaining bearish positioning.

SPOT – Daily

Trade Details

Strategy Details

Strategy: Short Call Vertical Spread

Direction: Bearish Credit Spread

Details: Sell to Open 2 SPOT Feb 06 $620/$635 Call Vertical Spreads @ $5.52 Credit per Contract.

Total Risk: This trade has a max risk of $1,896 (2 Contracts x $948) based on a hypothetical $100k portfolio risking 2%. We suggest risking only 2% of the value of your portfolio and divide it by $948 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bearish trade on a stock that is expected to continue lower over the duration of this trade.

1M/6M Trends: Mildly Bullish/Bearish

Relative Strength: 2/10

OptionsPlay Score: 113

Stop Loss: @ $11.04 (100% loss to value of premium)

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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 Monday’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. 

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