DailyPlay – Opening Trade (MRNA) – February 8, 2023

MRNA Bullish Opening Trades

View MRNA Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 3 Contracts Feb 24th $170/$160 Put Vertical Spreads @ $3.70 Credit per contract.

Total Risk: This trade has a max risk of $1,890 (3 Contracts x $630).

Counter Trend Signal: This is a stock that is currently bearish and oversold, with a strong potential for a quick bounce higher.

1M/6M Trends: Bearish/Neutral

Technical Score: 3/10

OptionsPlay Score: 88

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 Tuesday’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

Powell’s comments first sent the market higher, than that 50 point SPX gain turned into a 20 point loss, all to see another big rally to close the day up 53 points and a 1.3% gain. In the end, the Fed Chair’s comments were not enough to dissuade buyers from again bidding up stocks. The SPX did close on its highest level of the entire post-Oct. low rally, and did end the day at 4164, a quarter-percent above the 50% retracement up to the whole 2022 decline.

With the VIX at the low end of where it’s traded in the past year, I’m often seeing calls priced expensively and puts priced cheaply, making buying a call spread or selling a put spread less than an ideal way to put on a bullish bet. Nonetheless, we need to play within the context of what the market gives us.

Let’s look at the daily chart of Moderna (MRNA), which yesterday posted a daily Setup -9 count into its general support area and cloud bottom. It reports earnings on Feb. 23rd, just over two weeks from now. With the overall market holding up, let’s look for this to find some support around here. As such, let’s look to sell a Feb. 24th $170/$160 credit spread today. It went out yesterday at $3.70 mid, representing a credit of 37% of the strike differential – a mostly fair price for the spread (though a bit less than I’d typically like to receive as premium). The $170/$180 call spread costs $4.25, or ~43% of the strike differential – well too expensive to consider.

MRNA – Daily