DailyPlay – Opening Trade (GILD) Partial Closing Trades (LIT, MDT) – April 24, 2023

Partial Closing Trades

• LIT – 86.59% Loss: Sell to Close 7 Contracts (or 50% of your Contracts) May 19th $64/$69 Call Vertical Spreads @ $0.22 Credit. DailyPlay Portfolio: By Closing 7 of the 14 Contracts, we will receive $154. 
• MDT – 131.77% Gain: Sell to Close 5 Contracts (or 50% of your Contracts) May 19th $82.50 Calls @ $4.45 Credit. DailyPlay Portfolio: By Closing 5 of the 10 Contracts, we will receive $2,225.

GILD Bullish Opening Trade Signal

View GILD Trade

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish

Details: Buy to Open 8 Contracts June 16th $87.5/$95 Call Vertical Spreads @ $2.30 Debit per contract.

Total Risk: This trade has a max risk of $1,848 (8 Contracts x $231) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $231 to select the # contracts for your portfolio.

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

1M/6M Trends: Bullish/Bullish

Technical Score: 10/10

OptionsPlay Score: 113

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

The SPX ended last week down just a few points on the week, again showing its inability to hurdle the 4148/4155 major resistance area I have highlighted for a few months.

First things first: Right after we got long lithium (via the LIT ETF), a negative story came out on the space and all lithium-related stocks got mushed. We quickly have lost 87% of our long premium paid. I make no excuses. It was bad luck and we should exit at least half our trade now (that’s 7 of 14 long spreads) and hope to perhaps recover some of it in coming days.

With the bad we have plenty of good, too. Let’s remove 5 of 10 long MDT May 19th $82.50 calls we have on, up 131% on them.

And here’s a new idea that we’re going to play through their earnings report on May 3rd. Let’s look to buy the GILD June 16th $87.5/$95 call spread, as I suspect the breakout of both the flag pattern and the Lagging Line breaking out above its cloud should lead to a test of (or even a breakout above) all-time highs. Friday saw this go out at $2.305, or just shy of 31% of the strike differential. With a good earnings report we’ll keep this on; with a bad one we’ll say bye-bye.

GILD – Daily