DailyPlay – Opening Trade (AKAM) – March 6, 2023

AKAM Bullish Opening Trade Signal

View AKAM Trade

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish

Details: Buy to Open 4 Contracts April 21st $75/$82.50 Call Vertical Spreads @ $2.73 Debit per contract.

Total Risk: This trade has a max risk of $1,088 (4 Contracts x $272).

Counter Trend Signal: This sock is currently trading lower but is expected to bounce higher from support. 

1M/6M Trends: Bearish/Bearish

Technical Score: 2/10

OptionsPlay Score: 106

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 Friday’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

The rally that started on Thursday continued throughout Friday, as stocks posted a significant two-day gain right from where I called it would likely come from. At this point, I look at both last week’s low and February’s high as significant levels to key on in the short term. As of now, no one with a strong bullish or bearish view has been rewarded in 2023, but those who have traded the range – as we have – have been in much better shape.

Here’s a new idea: With Akamai (AKAM) having marked a daily Sequential -13 and Setup -9 at the very end of February, the three-day rally has taken it out of further near-term danger. Right now, the calls are a bit expensive, and selling ATM put spreads yields only 30% — hardly ideal.

AKAM – Daily

So, let’s get a bit more tactical by buying only a 1% position (vs. the standard 2%) in a bullish April 21 $75/$82.5 call spread. (This closed at $2.73 mid on Friday, or about 36% of the strike differential.) Then, let’s also look to buy the other half position of the same series and strikes if we see a pullback any day this week to the unfilled gap between $74 and $73.50. We’ll buy this at what the then current mid-price is. My upside target is when the stock reaches ~$87.79 (where we see the green highlighted Propulsion Exhaustion level).