DailyPlay – Opening Trade (CNC) Partial Closing Trade (NEE) Closing Trade (SRE) – October 18, 2022

Partial Closing Trade

• NEE -41.12% Gain: Buy to Close 2 Contracts Nov. 18th $77.50/$82.50 Call Verticals @ $1.16 Debit. DailyPlay Portfolio: By Closing 2 of the remaining 4 Contracts, we will be paying $232.

Closing Trade

• SRE -312.50% Gain: Sell to Close 2 Contracts Oct. 21st $165/$145 Put Verticals @ $18.15 Credit. DailyPlay Portfolio: By Closing the remaining 2 of 5 Contracts, we will be receiving $3630. Please note that this trade is for those that have not exited this trade completely, or only have 1 Contract open, based on our previous conditional closing trade alerts for SRE.

CNC Bullish Opening Trade

View CNC Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 12 Contracts Nov. 18th $75/$72.50 Put Vertical Spreads @ $0.95 Credit.

Total Risk: This trade has a max risk of $1,860 (12 Contracts x $155).

Counter Trend Signal: This is a Bullish trade on a stock that is experiencing a bearish trend. 

1M/6M Trends: Bearish/Bearish

Technical Score: 5/10

OptionsPlay Score: 85

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that if there is a multi-leg option strategy, it should be entered as a single trade. 

Please note these prices are based on the previous day’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. This will be reflected in the Portfolio tab within the OptionsPlay platform.

Investment Rationale

Stocks rallied sharply, making the past three days with major moves as investors are trying to decipher where the next even larger move heads. Monday’s large move higher came as institutional traders were well aware of the DeMark weekly Setup -9 count showing up this week. (What’s ironic is that if the SPX closes north of 3693 this week, the 9 count disappears – just like it has on every other prior attempt this year to mark this important signal.)

SPX – Weekly

The question I know that you are all waiting for me to answer is “Is it time to buy?”, and the answer is “Yes”. But this is not an “All-in” signal, but one to start putting some long exposure on. And I’ll be buying some more if we see the 3460/3400 zone trade. But I will be leaving the bulk of my investable dollars for a move down to the 3270/3116 zone I’ve previously highlighted as the likely ultimate low for the move, which could easily come sometime over the next couple of quarters. That being said, the potential weekly Setup -9 count coming along with a current monthly Setup -9 (the latter being quite rare in the total history of the SPX) makes me think that we should start to look putting some tactical long exposure on.

SPX – Monthly

A new idea for today: One of the biggest companies in the country is Centrene (CNC), a Midwest headquartered managed health care firm that acts as an intermediary between government-sponsored and privately insured health care programs. What I like about the chart is that it has toyed with the bottom of its weekly cloud for three weeks in a row, while also marking a Setup -9 this week while also finding support right at other lows from earlier this year.

CNC – Weekly

As such, let’s look to short the Nov. 18th $75/$72.5 put spread for what yesterday closed at 95 cents mid. That collects 38% of the strike differential, and puts time on our side if it sits here for a little bit.

Let’s also make some portfolio adjustments:

Let’s take off another 2 NEE short Nov. 18th $77.5/$82.5 call spreads today. Let’s cover the remaining 2 SRE Oct. 21 $165/$145 put spreads on any day this week that going into the NYSE 4pm ET close is above $146.46.