DailyPlay – Opening Trade (ADBE) – January 7, 2025

ADBE Bullish Opening Trade Signal

Investment Rationale

Adobe Inc. (ADBE) has recently entered oversold territory on both daily and weekly timeframes, showing signs of exhaustion that suggest a strong rally could be on the horizon, with a target price of $540.

Despite its recent underperformance, ADBE remains one of the most profitable AI software investments. Currently trading at a forward P/E ratio of 21.79x compared to the industry average of 27.85x, Adobe offers a substantial discount relative to its peers and the broader market. While its expected EPS growth of 12.13% is slightly below the industry average of 13.90%, its expected revenue growth of 9.76% exceeds the industry average of 9.30%. Additionally, Adobe’s net margins of 25.85% significantly outpace the industry average of 17.70%, highlighting its strong profitability and competitive positioning. These factors underscore its appeal as a compelling upside opportunity.

ADBE – Daily

Trade Details

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish Debit Spread

Details: Buy to Open 1 ADBE Feb 21, 2025 $425/$470 Call Vertical Spread @ $16.83 Debit per Contract.

Total Risk: This trade has a max risk of $1,683 (1 Contract x $1,683) based on a hypothetical $100k portfolio risking 2%. We suggest risking only 2% of the value of your portfolio and divide it by $1,683 to select the # contracts for your portfolio.

Counter Trend Signal: This is a bullish trade on a stock that is expected to continue higher off recent support.

1M/6M Trends: Bearish/Bearish

Relative Strength: 1/10

OptionsPlay Score: 103

Stop Loss: @ $8.42 (50% loss of premium)

View ADBE Trade

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. 

View ADBE Trade