DailyPlay – Opening Trade (V) Adjusting Trade (DXCM) – January 15, 2025

V Bullish Opening Trade Signal

Investment Rationale

Visa (V) recently broke out above its trading range with strong momentum, outperforming the S&P 500. This breakout provides an opportunity for further upside toward our $325 target. While Visa trades at a premium with a 27.48x forward P/E ratio compared to the industry average of 17.45x, its growth metrics remain competitive, including a 12.51% expected EPS growth versus 13.19% for the industry and a 9.88% expected revenue growth compared to the industry average of 8.37%. Additionally, Visa’s industry-leading profitability, highlighted by its 54.96% net margins against the industry average of 20.83%, underscores its significant upside potential. The company is expected to announce earnings after market close on Thursday, January 30.

V – Daily

Trade Details

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish Debit Spread

Details: Buy to Open 2 V Mar 21, 2025 $305/$325 Call Vertical Spreads @ $9.50 Debit per Contract.

Total Risk: This trade has a max risk of $1,900 (2 Contracts x $950) based on a hypothetical $100k portfolio risking 2%. We suggest risking only 2% of the value of your portfolio and divide it by $950 to select the # contracts for your portfolio.

Counter Trend Signal: This is a bullish trade on a stock that is expected to continue to bounce off recent support.

1M/6M Trends: Bearish/Neutral

Relative Strength: 9/10

OptionsPlay Score: 90

Stop Loss: @ $4.75 (50% loss of premium)

View V 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 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. 

DXCM Bullish Trade Adjustment

Investment Rationale

We are making a quick adjustment to the DexCom, Inc. (DXCM). Although the stock was down most of the day, it finished strong. With the options in our spread expiring this Friday and some remaining volatility premium, we will capitalize on this opportunity and position for potential upside momentum as the week concludes. Specifically, we will buy to close our short option for pennies and sell to open a new option with the same expiration, closer to the current stock price, for a meaningful net credit.

Original Position:

• Long 3 Jan 17, 2025 75 Calls
• Short 3 Jan 17, 2025 92.5 Calls

The cost basis is $6.30 per 1×1 spread. For the entire position, consisting of three spreads, the total cost basis is $1,890 ($6.30 x 3 x 100) for the current position.

Trade Details

Resulting Position after Roll/Adjustment:

• Long 3 Jan 17, 2025 75 Calls
• Short 3 Jan 17, 2025 81 Calls

With a $0.48 net credit fill for the roll, the cost basis is reduced from $6.30 to $5.82 per 1×1 spread. For the entire position, consisting of three spreads, this results in a total cost basis of $1,746 ($5.82 x 3 x 100) for the new DXCM position.

Adjusting the Trade

Use the following details to Adjust the DXCM trade on your trading platform.

PLEASE NOTE that these prices above are based on Tuesday’s closing prices.