DailyPlay – Opening Trade (AIG) Partial Closing Trade (SPY) – October 26, 2022

Partial Closing Trade

• SPY -58.00% Gain: Buy to Close 2 Contracts Nov. 9th $365/$361 Put Verticals @ $0.63 Debit. DailyPlay Portfolio: By Closing 2 of the 8 Contracts, we will be paying $136.

AIG Bearish Opening Trade

View AIG Trade

Strategy Details

Strategy: Short Call Vertical Spread

Direction: Bearish

Details: Sell to Open 9 Contracts Nov. 18 $54/$58 Call Vertical Spreads @ $1.68 Credit.

Total Risk: This trade has a max risk of $2,088 (9 Contracts x $232).

Counter Trend Signal: This is a Bearish trade on a stock that is experiencing a bullish trend.

1M/6M Trends: Bullish/ Mildly Bullish

Technical Score: 7/10

OptionsPlay Score: 104

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 again rallied sharply on Tuesday, pushing up through some important resistance at 3819. But before you get too bullish, that level is a prior weekly TDST support line, and we’re just today getting to the midpoint of the week, with stocks looking lower after Microsoft’s earnings miss and Google’s slowing sales growth. (In yesterday’s DP comments I alluded to my belief that major multi-nationals were likely to have troubled numbers this reporting season from the impact of the very high dollar.  The bottom line is that we haven’t yet seen a breakout above that level until we see where the SPX closes on Friday.

For a new trade idea today, I see that yesterday marked a daily Setup +9 count in AIG, while also stalling two days in a row against its TDST Line ($54.59) and the top of its daily cloud. This, to me, is a trader’s sale. (If it doesn’t work, so be it, but these are the type multiple unrelated indicators lining up in the same place that make sense to me to be looking at.)  So, let’s sell the Nov. 18th $54/$58 call spread. Yesterday this closed at $1.625 mid, or 41% of the strike differential. The firm reports earnings on Nov. 8th and we will likely be out of it by then.

AIG – Daily

As I write this Tuesday night, S&P futures are down some 35 points. Thus, with yesterday seeing the SPY reach its daily Propulsion Exhaustion level, let’s look to exit 2 of the 8 short Nov. 9th $365/$361 put spreads we have on. I’d likely do one of those two sometime this morning, and the other if the SPX approaches unchanged over the course of the day. Anything even with 10 pts. of becoming unchanged today would be a place I’d remove the second spread.

SPY – Daily