DailyPlay – Opening Trade (BYND) – February 10, 2023

BYND Bullish Opening Trades

View BYND Trade

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish

Details: Buy to Open 20 Contracts Mar 17th $17.50/$22.50 Call Vertical Spreads @ $0.92 Debt per contract.

Total Risk: This trade has a max risk of $1,840 (20 Contracts x $92).

Counter Trend Signal: This is a stock that is currently neutral and is expected to continue its uptrend.

1M/6M Trends: Neutral/Neutral

Technical Score: 1/10

OptionsPlay Score: 162

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 Thursday’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

Stocks gapped well higher on the open, but sold off straight and into negative territory by mid-session, and then closed well-lower and near the lows of the day. It was a telling day to me, and keeps me thinking that we’re going to see the 5% decline from the mid-4100 SPX zone that I declared early in the week. Today is Friday, with another weekly option expiration at hand.

Here’s an idea that to me appears as a low risk new long – perhaps even best as simply getting long the stock as it’s less than a $17 one. Let’s look at the below daily chart of Beyond Meat (BYND). It put in a horizontal 3.5 month base that recently broke out upside to stop on a Setup +9 count right into its first resistance area. It has now pulled back to the breakout point, which happens to coincide with its uptrend line. I can’t be sure it bottoms right here, but I’d say it’s not a bad place to get long (or minimally, start a long position).

BYND – Daily

Buying a call spread is always an option, especially in a low volatility environment like we’re now in. Looking at the March 17th $17.5/$22.5 call spread, we need to spend only about ~20% of the strike differential (but the stock is some 6% beneath the ATM strike, so a theoretical higher cost than the 20%). This is still within the realm of what we consider fairly priced, and certainly something you can consider.

Personally, I’d consider doing both a partial commitment using the above call spread, and now buying a partial position in the stock and scaling it down buying down to $15 on the rest. I look at this in terms of a medium-term holding period. Earnings are out on Feb. 23rd.