DailyPlay – Opening Trade (XYZ) – August 07, 2025

XYZ Bullish Opening Trade Signal

Investment Rationale

Investment Thesis
Block Inc. appears poised for continued upside ahead of its earnings announcement after the close today, Thursday, August 7th. The stock has recently staged a strong recovery and is showing renewed leadership in the software sector, signaling increasing investor confidence. With a breakout from consolidation and improving sentiment, earnings could serve as a catalyst for a move toward the $85 price target. Option flows and technical strength suggest traders are positioning for a bullish reaction.

Technical Analysis
After breaking out of a multi-month consolidation and reclaiming its 200-day moving average, XYZ rallied to fill a key gap near $82 before pulling back in a controlled fashion. The retreat has paused near the 20-day moving average, now acting as short-term resistance and a key level to watch. Momentum remains constructive, RSI has reset to 57, signaling digestion of gains rather than a loss of trend strength. This pattern of breakout, gap-fill, and orderly pullback sets up a compelling continuation scenario toward $85, especially with earnings potentially serving as a bullish catalyst.

Fundamental Analysis
XYZ trades at a valuation discount despite growth metrics that significantly outpace industry norms, making it an attractive candidate for re-rating post-earnings. Strong margin efficiency and robust top-line momentum highlight the company’s ability to scale profitably.

• Forward PE Ratio: 16.27x vs. Industry Median 27.66x
• Expected EPS Growth: 23.90% vs. Industry Median 11.68%
• Expected Revenue Growth: 11.39% vs. Industry Median 9.38%
• Net Margins: 10.93% vs. Industry Median 8.59%

Options Trade
A bullish call vertical is appropriate ahead of the earnings event: Buy 1 XYZ Aug 29, 2025 75/85 Call Spread for $3.65. This defined-risk position costs $365 per spread and offers a max reward of $635, implying a 1.74:1 reward-to-risk ratio. The structure benefits from a bullish earnings reaction that propels XYZ toward or above the $85 target. With 23 days to expiration, the trade provides enough time for a post-earnings move to materialize while limiting capital at risk.

XYZ – Daily

Trade Details

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish Debit Spread

Details: Buy to Open 5 XYZ Aug 29 $75/$85 Call Vertical Spreads @ $3.65 Debit per Contract.

Total Risk: This trade has a max risk of $1,825 (5 Contracts x $365) based on a hypothetical $100k portfolio risking 2%. We suggest risking only 2% of the value of your portfolio and divide it by $365 to select the # contracts for your portfolio.

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

1M/6M Trends: Bullish/Bullish

Relative Strength: 4/10

OptionsPlay Score: 105

Stop Loss: @ $1.83 (50% loss of premium)

View XYZ 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 Wednesday’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 XYZ Trade