DailyPlay – Opening Trade (LOW) & Closing Trade (XYZ, MU) – August 12, 2025

Closing Trade

• XYZ – 60% loss: Sell to Close 5 Contracts (or 100% of your Contracts) Aug 29 $75/$85 Call Vertical Spreads @ $1.57 Credit. DailyPlay Portfolio:  By Closing 5 Contracts, we will be collecting $785. We initially opened these 5 contracts on August 07 @ $3.93 Debit. Our loss, therefore, is $236 per contract.
• MU – 80% gain: Buy to Close 6 Contracts (or 100% of your Contracts) Aug 29 $109/$104 Put Vertical Spreads @ $0.40 Debit. DailyPlay Portfolio:  By Closing 6 Contracts, we will be paying $240. We initially opened these 6 contracts on July 24 @ $1.98 Credit. Our gain, therefore, is $948.

LOW Bullish Opening Trade Signal

Investment Rationale

Investment Thesis
Lowe’s Companies, Inc. (LOW) is entering earnings season with strong relative performance and a favorable valuation backdrop. The stock has recently cleared a key resistance level, reflecting renewed investor confidence ahead of its August 20th report. With management continuing to drive operational efficiency and market share gains, LOW appears well positioned to extend its current momentum into the fall. The combination of technical strength, fundamental resilience, and a modest valuation discount supports a bullish stance into earnings and beyond.

Technical Analysis
Lowe’s recent breakout above the $235 resistance level marks an important shift in sentiment, with the stock now trading above both short- and intermediate-term moving averages while challenging its 200-day moving average. The uptrend has been reinforced by a series of higher lows since May, and relative strength remains favorable compared to the S&P 500. The RSI near 65 reflects healthy bullish momentum without signaling overbought conditions. A strong earnings catalyst could accelerate this trend, creating a clear path toward our $265 upside target.

Fundamental Analysis
Lowe’s valuation remains modestly below industry norms while profitability metrics remain superior. Continued operational execution, paired with a disciplined cost structure, provides a cushion against potential macro headwinds. Earnings growth is in line with peers, and revenue growth, though modest, is supported by steady demand in home improvement and construction markets.

• Forward PE Ratio: 19.66x vs. Industry Median 23.35x
  
• Expected EPS Growth: 7.62% vs. Industry Median 7.18%
  
• Expected Revenue Growth: 2.75% vs. Industry Median 3.75%
  
• Net Margins: 8.22% vs. Industry Median 6.55%
  

Options Trade
Selling the LOW Sep 12, 2025 235/230 Put Vertical at $2.02 offers an attractive risk/reward profile for bullish traders expecting the stock to hold above the $235 breakout zone post-earnings. The trade risks $298 to capture a maximum profit of $202, representing a reward-to-risk ratio of 0.68, meaning there’s potential to earn $0.68 for every $1.00 at risk if Lowe’s remains above $235 at expiration, 32 days from now. This setup benefits from both time decay and the potential for volatility contraction following earnings, while targeting a defined, favorable payoff if LOW maintains or builds on recent strength.

LOW – Daily

Trade Details

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish Credit Spread

Details: Sell to Open 6 LOW Sep 12 $235/$230 Put Vertical Spreads @ $2.02 Credit per Contract.

Total Risk: This trade has a max risk of $1,788 (6 Contracts x $298) based on a hypothetical $100k portfolio risking 2%. We suggest risking only 2% of the value of your portfolio and divide it by $298 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: 5/10

OptionsPlay Score: 106

Stop Loss: @ $4.04 (100% loss to value of premium)

View LOW 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 LOW Trade