DailyPlay – Opening Trade (WHR) – August 10, 2023

WHR Bearish Opening Trade Signal

View WHR Trade

Strategy Details

Strategy: Long Put Vertical Spread

Direction: Bearish

Details: Buy to Open 3 Contracts Sept 15th $145/$130 Put Vertical Spreads @ $6.70 Debit per contract.

Total Risk: This trade has a max risk of approximately $2,010 at market opening (3 Contracts x $670) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $670 to select the # shares for your portfolio.

Trend Continuation Signal: This stock is mildly bearish to bearish, and is expected to break below a level of support.

1M/6M Trends: Bearish/Mildly Bearish

Technical Score: 4/10

OptionsPlay Score: 103

Stop Loss: @ $3.35 Credit (50% loss).

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. 

Investment Rationale

As a reminder, the goal of our DailyPlay signals is to teach the best practices for maximizing every idea for profitability. We strive to exemplify how professional traders reach profitability through these ideas. Because even the best ideas will underperform if losses are not cut quickly and profits are taken too soon. As I review the DailyPlay portfolio there are multiple positions that one might be tempted to take profits on. WHR, UPS and LYFT are all candidates for this. However, I remind you that taking small profits is counterproductive to profitability, especially when the market has confirmed your outlook. WHR is a prime example, we were expecting a breakdown below $145 on earnings, it’s now moved in our favor and instead of taking a small profit, this presents an opportunity to potentially hit a home run if WHR declines further. I’m going to add more exposure in this position by buying more of the Sept $145/$130 Put Verticals @ $6.70 Debit. With a hypothetical portfolio of $100,000 I recommend adding another 2% of risk on this trade, which is 3 Contracts for an additional risk of $2,010. We will set a stop loss on the entire 6 open contracts at 50% of the premium paid at $3.35 Credit. This improves our Max Potential profit of $5,460 with a risk of about $1,500 if all 6 contracts are stopped out. 

WHR – Daily