ADBE Bullish Opening Trade Signal

Investment Rationale

Adobe Inc. (ADBE) has recently entered oversold territory on both daily and weekly timeframes, showing signs of exhaustion that suggest a strong rally could be on the horizon, with a target price of $540.

Despite its recent underperformance, ADBE remains one of the most profitable AI software investments. Currently trading at a forward P/E ratio of 21.79x compared to the industry average of 27.85x, Adobe offers a substantial discount relative to its peers and the broader market. While its expected EPS growth of 12.13% is slightly below the industry average of 13.90%, its expected revenue growth of 9.76% exceeds the industry average of 9.30%. Additionally, Adobe’s net margins of 25.85% significantly outpace the industry average of 17.70%, highlighting its strong profitability and competitive positioning. These factors underscore its appeal as a compelling upside opportunity.

ADBE – Daily

Trade Details

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish Debit Spread

Details: Buy to Open 1 ADBE Feb 21, 2025 $425/$470 Call Vertical Spread @ $16.83 Debit per Contract.

Total Risk: This trade has a max risk of $1,683 (1 Contract x $1,683) based on a hypothetical $100k portfolio risking 2%. We suggest risking only 2% of the value of your portfolio and divide it by $1,683 to select the # contracts for your portfolio.

Counter Trend Signal: This is a bullish trade on a stock that is expected to continue higher off recent support.

1M/6M Trends: Bearish/Bearish

Relative Strength: 1/10

OptionsPlay Score: 103

Stop Loss: @ $8.42 (50% loss of premium)

View ADBE Trade

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 Monday’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. 

View ADBE Trade

SHOP Bullish Trade Adjustment

Investment Rationale

Shopify (SHOP) – We are maintaining our bullish outlook following the gap move higher to a new 52-week high a little while back and continue to hold a longer-term target of $140. After a recent pullback in the stock’s price, we will roll the short option of our long call vertical spread to capture the gain on the current short position and bring in additional premium, as the expiration date is quickly approaching (11 DTE).

We will adjust this position by closing the short leg and selling to open another leg with a lower strike price but the same expiration, for a net credit to the position. This adjustment will lower our cost basis but at the detriment of reducing our maximum potential profit if the upside momentum from yesterday continues. Below is the current position breakdown with the individual legs listed.

Original Position:

• Long 3 Jan 17, 2025 $105 Calls
• Short 3 Jan 17, 2025 $125 Calls
• Cost Basis $6.39 Net Debit

Trade Details

Strategy Details

Strategy: Adjustment of a bullish Call Vertical Spread

Direction: Resulting in a new bullish Call Vertical Spread

Details: Buy to Close 3 Contracts Jan 17, 2025 $125 Call and Sell to Open 3 Contracts Jan 17, 2025 $115 Call @ 1.06 net Credit, or $106 per 1×1 roll ($1.06 x 100). The total net Credit received for rolling these 3 call contracts is $318 ($1.06 x 100 x 3) This roll establishes a new Bullish Call Vertical Spread.

Resulting Position after Roll/Adjustment:

• Long 3 Jan 17, 2025 $105 Call
• Short 3 Jan 17, 2025 $115 Call
• Cost Basis $5.37 Net Debit

Adjusting the Trade

Use the following details to Adjust the SHOP trade on your trading platform.

PLEASE NOTE that these prices above are based on Friday’s closing prices.

Closing Trades

• AAPL – 90% gain: Buy to Close 2 Contracts (or 100% of your Contracts) Jan 17 $260/$270 Call Vertical Spreads @ $0.14 Debit. DailyPlay Portfolio:  By Closing both Contracts, we will pay $28. We initially opened these 2 Contracts on Dec 13 @ $1.50 Credit. Our gain, therefore, is $272.
• XLF – 58% loss: Sell to Close 8 Contracts (or 100% of your Contracts) Jan 17 $48 Calls @ $0.86 Credit. DailyPlay Portfolio:  By Closing all 8 Contracts, we will receive $688. We initially opened these 8 Contracts on Nov 11 @ $2.05 Debit. Our loss, therefore, is $119 per contract.

DailyPlay Portfolio Review

Our Trades

AAPL – 14 DTE

Bearish Credit Spread – We are closing this position today for a profit.

AMD – 168 DTE

Bullish Long Calls – Advanced Micro Devices, Inc. (AMD) – We recently established this position. While we are currently down slightly, we plan to stay the course for now, as there is still ample time remaining in the option contract.

DXCM – 14 DTE

Bullish Debit Spread – DexCom, Inc. (DXCM) – We still maintain our bullish forecast on the stock, so we plan to stay the course for the time being. We may roll the short call down to bring in additional premium, which will lower our potential maximum gain while simultaneously reducing the cost basis on our long call.

NVDA – 7 DTE

Bullish Call Diagonal Spread – NVIDIA Corporation (NVDA) – We recently made a second adjustment to this position, which has lowered our loss basis on the long option contract. For now, we will stay the course after this adjustment, as the short option contract has just 8 days until its expiration date.

QQQ – 14 DTE

Bullish Long Call – The QQQ and the market, in general, have experienced a pullback, it seems someone closed the damper in the chimney on the so-called Santa Claus rally between Christmas and New Year’s Day. With the new year now upon us, we will maintain the position and may sell a call this week as a hedge if we see a bounce in the market. This move would help lower the cost basis on our long call option contracts.

SHOP – 14 DTE

Bullish Debit Spread – Shopify (SHOP) – We maintain our bullish outlook and plan to stay the course for now. We may consider rolling the short call down to bring in additional premium. This adjustment would reduce the cost basis on our long call while lowering the potential maximum gain.

XLF – 14 DTE

Bullish Long Call – We are closing this position today for a loss.

Season’s Greetings: DailyPlay Update

With the holidays in full swing, we want to share a quick update on our DailyPlays. Throughout this time, we’ll continue to monitor our DailyPlay Portfolio to ensure we stay on track. While we may make adjustments or sell certain positions if warranted, we won’t be adding any new positions between the Christmas holiday and New Year’s Day.

Today, we’ll be closing our position in SQ, as it has hit our stop-loss threshold.

May your holiday season be merry and bright, and here’s to a successful year ahead!

Warmest Regards,
Brian Overby 
OptionsPlay Senior Options Strategist

Closing Trade

• SQ – 61% loss: Sell to Close 4 Contracts (or 100% of your Contracts) Jan 17 $97.50/$115 Call Vertical Spreads @ $1.49 Credit. DailyPlay Portfolio:  By Closing all 4 Contracts, we will receive $596. We initially opened these 4 Contracts on Dec 12 @ $3.85 Debit. Our loss, therefore, is $236 per contract.

AMD Bullish Opening Trade Signal

Investment Rationale

Advanced Micro Devices, Inc. (AMD) has recently reached oversold conditions on both daily and weekly timeframes and is exhibiting signs of exhaustion, indicating a higher likelihood of a strong rally ahead.

The stock trades in line with the industry average, with a forward price-to-earnings (PE) ratio of 23.85x compared to the industry average of 23.54x. However, AMD is projected to grow significantly faster than its peers, with anticipated earnings-per-share (EPS) growth of 40.07%, well above the industry average of 19.62%. Similarly, its expected revenue growth is 21.61%, outpacing the industry average of 12.81%. Despite this strong growth potential, AMD’s net margins are 7.52%, falling short of the industry average of 18.77%.

AMD – Daily

Trade Details

Strategy Details

Strategy: Long Call

Direction: Bullish Long Call

Details: Buy to Open 1 AMD June 20, 2025 $100 Call @ $31.92 Debit per Contract.

Total Risk: This trade has a max risk of $3,192 (1 Contract x $31,92) based on a based on a hypothetical $100k portfolio risking 3%. We normally suggest risking only 2% but in this instance we recommend risking 3% of the value of your portfolio and divide it by $31.92 to select the # contracts for your portfolio.

Counter Trend Signal: This is a bullish trade on a stock that is expected to continue higher off recent support.

1M/6M Trends: Bearish/Bearish

Relative Strength: 2/10

OptionsPlay Score: 79

Stop Loss: @ $15.96 (50% loss of premium)

View AMD Trade

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 Monday’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. 

View AMD Trade

DailyPlay Portfolio Review

Our Trades

AAPL – 25 DTE

Bearish Credit Spread – Apple Inc. (AAPL) -We are down slightly on the position we recently established, and we plan to stay the course for now while keeping a close watch.

DXCM – 25 DTE

Bullish Debit Spread – DexCom, Inc. (DXCM) – The stock has solid momentum to the upside, and we have a small gain on this position. We plan to stay the course for the time being.

NVDA – 18 DTE

Bullish Call Diagonal Spread – NVIDIA Corporation (NVDA) – We recently rolled the short call leg of our NVDA diagonal position up and out in time, generating a small net credit. With the recent weakness in the stock’s price, we decided to roll the short option again to capture the gain on the short position and bring in additional premium. We will stay the course for now after this second adjustment to the position.

QQQ – 25 DTE

Bullish Long Call – Invesco QQQ Trust (QQQ) – The QQQ and the market have experienced a small pullback following the recent Fed meeting, and the trade is solidly profitable. With sufficient time remaining until expiration, we will maintain the position.

SHOP – 25 DTE

Bullish Debit Spread – Shopify (SHOP) – The position is profitable, and the plan is to stay the course for now.

SQ – 25 DTE

Bullish Debit Spread – Block, Inc. (SQ) – We are down on the position, watching it closely, and may need to exit soon if we don’t see signs of upside potential.

XLF – 32 DTE

Bullish Long Call – Financial Select Sector SPDR ETF (XLF) – We recently broke a downside support level and are currently facing some losses on the position. While we remain cautious about the sector, we may need to sell a call for protection. Keeping a tight watch on this trade.

Note:

• Today we are closing ANET for a profit at market opening.
• We made the call to also close FDX at market opening as the Earnings announcement today pushed the price higher.

Closing Trades

• ANET – 97% gain: Sell to Close 13 Contracts (or 100% of your Contracts) Jan 3 $105/$110 Call Vertical Spreads  @ $2.95 Credit. DailyPlay Portfolio:  By Closing all 13 Contracts, we will receive $3,835. We initially opened these 13 Contracts on Dec 11 @ $1.50 Debit. Our gain, therefore, is $1,885.
• FDX – 24% gain: Sell to Close 3 Skip-Strike Butterfly on the open (or 100% of your position) Dec 20 $305/$312.50/$327.50 Call Butterflies @ $1.20 Net Credit. DailyPlay Portfolio: By closing the position, we will receive $360 ($120 x 3). We initially opened these 3 butterflies on Dec 19 @ $0.55 Net Credit ($55 x 3 = $165). Our total proceeds, including the initial credit, are $525 ($360 + $165). Our percentage gain is calculated based on the maximum risk of the trade: Gain: $525, Maximum Risk: $2,250, Percentage Gain: 23% ($525 / $2,250).

Investment Rationale

We plan to close our position in FedEx (FDX) on Friday, which was featured as yesterday’s daily play. Our goal for this earnings trade was to capture a net credit of $0.55, or $55, per 1x2x1 Skip-Strike Butterfly position. Following the company’s earnings announcement and the resulting after-hours market reaction, there may be an opportunity to secure an additional net credit when closing the position. That’s not a typo – we opened the trade for a net credit, and we may be able to close it for a net credit as well. The ideal scenario would be for FDX to settle at the short strike of $312.50 right at the market close on Friday.

 We will update this post with the final transaction details after the market opens. This trade below was executed to close the position at the open of the market this morning.

FDX Bearish Opening Trade Signal

Investment Rationale

FedEx (FDX) – FedEx has exhibited strong bearish momentum recently, and we anticipate this trend to persist into the company’s upcoming earnings report on Thursday, Dec. 19, after the market close. Implied volatility indicates a stock price range of plus or minus $29, approximately 10% of the current stock price. For Q2 fiscal 2025, FedEx is expected to report earnings of $3.90 per share, reflecting a 2.3% year-over-year decline, with revenue projected at $22.07 billion, down 0.5%. Challenges such as demand erosion, geopolitical uncertainty, and inflation are expected to weigh heavily on results, particularly in Asia and Europe. The Express segment, FedEx’s largest, is anticipated to face volume-driven revenue declines, with an expected drop of 0.3%. FedEx’s ongoing struggles to manage demand pressures and control costs are likely to continue impacting its performance in the post-COVID business environment.

FDX – Daily

Trade Details

Strategy Details

Strategy: Skip-Strike Call Butterfly 

Direction: Bearish Call Butterfly

Details: Buy to Open 3 FDX Dec 20, 2024 $305/$312.50/$327.50 Call Butterflies @ $0.55 Credit per Contract. This strategy generates a Credit and not a Debit like a standard Butterfly.

Breakdown: The individual legs for the skip-strike butterfly are as follows

• Buy 1 Contract Dec 20 $305 Call
• Sell 2 Contracts Dec 20 $312.50 Calls
• Buy 1 Contract Dec 20 $327.50 Call

Total Risk: This trade has a max risk of $2,085 (3 Contracts x $695) based on a hypothetical $100,000 portfolio normally risking 2%. We suggest using 2% of your portfolio value and divide it by $695 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bearish trade on a stock that is expected to continue its bearish trajectory.

1M/6M Trends: Bearish/Bearish

Relative Strength: 6/10

OptionsPlay Score: 250

Stop Loss: @ $1.10 (100% loss to value of premium received)

View FDX Trade

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 Wednesday’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. 

View FDX Trade

NVDA Bullish Trade Adjustment

Investment Rationale

We recently rolled the short call leg of our NVDA diagonal position up and out in time, generating a small net credit. With the recent weakness in the stock’s price, we will roll the short option again to capture the gain on the current short position and bring in additional premium by rolling down and out this time around.

We will adjust this position by closing one leg and opening another leg of this Call Diagonal Spread. Below is the current position breakdown with the individual legs listed.

Original Position:

• Long 1 Jan 17, 2025 $124 Call
• Short 1 Dec 13, 2024 $148 Call 
• Cost Basis $16.79 Net Debit

Current Position after the previous Roll/Adjustment:

• Long 1 Jan 17, 2025 $124 Call
• Short 1 Dec 27, 2024 $152.5 Call
• Cost Basis $16.22 Net Debit

Trade Details

Strategy Details

Strategy: Second Adjustment of a bullish Call Diagonal Spread

Direction: Resulting in a new bullish Call Diagonal Spread

Details: Buy to Close 1 Contract Dec 27 $152.50 Call and Sell to Open 1 Contract Jan 10 $144 Call @ a $2.00 net Credit, or $200 per 1×1 roll ($2.00 x 100). The total net Credit received for rolling this one call contract is $200. This roll establishes a new Call Diagonal position in NVDA.

Total Risk: This trade has a max risk of $1,422 (1 Contract x $1,422) based on a hypothetical $100,000 portfolio normally risking 2%. We suggest using 2% of your portfolio value and divide it by $1,422 to select the # contracts for your portfolio.

Current Position:

• Long 1 Jan 17, 2025   124 Call
• Short 1 Dec 27, 2024 152.5 Call

Resulting Position after Roll/Adjustment:

• Long 1 Jan 17, 2025  $124 Call
• Short 1 Jan 10, 2025 $144 Call
• Cost Basis $14.22 Net Debit ($16.22 Debit brought forward – $2.00 Credit received)

Adjusting the Trade

Use the following details to Adjust the NVDA trade on your trading platform.

PLEASE NOTE that these prices above are based on Tuesday’s closing prices.

Below is the position following today’s Adjustment Trade:

• AMZN – 95% gain: Sell to Close 2 Contracts (or 100% of your Contracts) Jan 17 $205/$230 Call Vertical Spreads  @ $20.38 Credit. DailyPlay Portfolio:  By Closing both Contracts, we will receive $4,076. We initially opened these 2 Contracts on Nov 13 @ $10.44 Debit. Our gain, therefore, is  $1,988.
• CSGP – 117% loss: Buy to Close 5 Contracts (or 100% of your Contracts) Jan 17 $75/$70 Put Vertical Spreads  @ $1.63 Debit. DailyPlay Portfolio:  By Closing all 5 Contracts, we will pay $815. We initially opened these 5 Contracts on Dec 4 @ $0.75 Credit. Our loss, therefore, is $88 per Contract.