DailyPlay – Opening Trade (SBUX) – Closing Trades (SBUX, FCX) – September 22, 2023

Closing Trades

• SBUX – 60.50% Gain: Buy to Close 7 Contracts (or 100% of your Contracts) Oct 27th $97/$102 Call Vertical Spreads @ $0.79 Debit. DailyPlay Portfolio: By Closing all 7 Contracts, we will pay $553. We initially opened these 7 Contracts @ $2.00 Credit. Our average gain, therefore, is $353 per contract. 
• FCX – 52.89% Loss: Sell to Close 8 Contracts (or 100% of your Contracts) Oct 20th $38/$45 Call Vertical Spreads @ $1.14 Credit. DailyPlay Portfolio: By Closing all 8 Contracts, we will receive $912. We initially opened these 8 Contracts on August 22 @ $2.32 Debit. Our average loss, therefore, is $118 per contract. 

SBUX Bearish Opening Trade Signal

View SBUX Trade

Strategy Details

Strategy: Short Call Vertical Spread

Direction: Bearish

Details: Sell to Open 6 Contracts Nov 3rd $93/$99 Call Vertical Spreads @ $2.45 Credit per contract.

Total Risk: This trade has a max risk of $2,130 (6 Contracts x $355) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $355 to select the # shares for your portfolio.

Trend Continuation Signal: This stock is in a bearish trend and is expected to continue lower.

1M/6M Trends: Bearish/Bearish

Technical Score: 4/10

OptionsPlay Score: 103

Stop Loss: @ $5.00 Debit (100% 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 Thursday’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

With the recent sharp rise in yields, equity valuations have come under pressure. The S&P has closed just at its major support level of $4330 and bulls need to hold this level to keep markets in a neutral trend, otherwise a break below turns bearish and targets $4100 to the downside. This requires us to close out our full FCX position, which has reached its stop loss level. Additionally, SBUX has reached our take profit level and we need to roll it lower to seek further bearish exposure now that its $95 support level has been broken. Roll to Nov 3 $93/$99 Call Vertical @ $2.45 Credit. With a hypothetical portfolio of $100,000, I recommend risking 2% of the portfolio’s value to this trade, which is 6 Contracts for a risk of $2,130. We will set a stop loss on the put spread at 100% of the premium collected @ $5.00 Debit.