DailyPlay – Opening Trade (KEY) – September 18, 2023

KEY Bullish Opening Trade Signal

View KEY Trade

Strategy Details

Strategy: Long Call

Direction: Bullish

Details: Buy to Open 16 Contracts Nov 17th $11 Calls @ $1.28 Debit per contract.t.

Total Risk: This trade has a max risk of $2,032 (16 Contracts x $127) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $127 to select the # shares for your portfolio.

Trend Continuation Signal: This stock is in a bullish trend and is expected to continue higher.

1M/6M Trends: Bullish/Mildly Bullish

Technical Score: 7/10

OptionsPlay Score: 77

Stop Loss: @ $0.65 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 Friday’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

All eyes are on the FOMC this week as the Fed is expected to keep rates at the current level. Investors will be focused on Chairman Powell’s language around the latest CPI and employment data, and how that factors into rate hikes for the rest of the year. Currently the market is expecting a 33% chance of a rate hike in November and traders are already betting on a faster than expected rate cuts for next year. Equity markets remained neutral as extreme bearishness in the markets have started to recede. What’s interesting is that small caps and value have started to outperform large cap growth, which factors into how we look for opportunties right now.

Financials has been on our radar for a couple weeks and recently started to show relative strength. Looking for smaller cap, regional banks we find KEY as an  way to play for upside in equities. KEY’s trends turned bullish last week and trades at a reasonable 8x forward earnings and a 7% dividend yield provides an attractive risk/reward entry for long exposure. With IV Rank @ 8%, I’m looking to simply buy the Nov $11 Call @ $1.27 Debit. With a hypothetical portfolio of $100,000, I recommend risking 2% of the portfolio’s value to this trade, which is 16 Contracts for a risk of $2,032. We will set a stop loss on the put spread at 50% of the premium paid @ $0.65 Credit.

KEY – Daily