COST Bearish Opening Trade Signal

Investment Rationale

Costco Wholesale Corporation (COST) recently broke down from its trading range with strong momentum, underperforming the S&P 500 and signaling further downside potential toward our $800 target. Costco is Significantly Overvalued and trades at more than twice the valuation of its peers, despite growth and profitability metrics that are only average within the industry, highlighting considerable downside risks.

COST – Daily

Trade Details

Strategy Details

Strategy: Modified Call Butterfly

Direction: Bearish Modified Call Butterfly

Details: Sell to Open 2 COST Nov 15 $930/$940/$950 Modified Call Butterflies @ $0.49 Credit per Contract. Please carefully consider the amount of Contracts for each leg of this spread, which is (Buy 1x$930 Call) & (Sell 3x$940 Calls) & (Buy 2x$950 Calls) per Contract. Refer to Entering the Trade, right at the bottom where we opened 2 Contracts.

Total Risk: This trade has a max risk of $1,902 (2 Contracts x $951) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $951 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bearish trade on a stock that is underperforming and is expected to continue lower.

1M/6M Trends: Bearish/Neutral

Relative Strength: 9/10

OptionsPlay Score: 250

Stop Loss: @ $0.98 (100% loss to value of premium received)

View COST 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 Tuesday’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 COST Trade

LULU Bullish Opening Trade Signal

Investment Rationale

Lululemon Athletica Inc. (LULU) recently broke out above its trading range with strong momentum, outperforming the S&P 500 and signaling potential upside toward our $320 target. LULU trades at a 10% discount to its peers, with projected revenue growth nearly twice the industry average and significantly higher profitability. Its forward P/E ratio stands at 20.37x, compared to the industry average of 22.05x. The company’s earnings announcement is anticipated in the first week of December.

LULU – Daily

Trade Details

Strategy Details

Strategy: Long Call Diagonals

Direction: Bullish Call Diagonals

Details: Buy to Open 3 LULU Nov 15/Dec 6 $315/$320 Call Diagonals @ $7.22 Debit per Contract.

Total Risk: This trade has a max risk of $2,166 (5 Contracts x $722) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $722 to select the # contracts for your portfolio.

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

1M/6M Trends: Bullish/Mildly Bullish

Relative Strength: 3/10

OptionsPlay Score: 130

Stop Loss: @ $3.61 (50% loss of premium)

View LULU 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 LULU Trade

Closing Trades

• ABBV – 10.07% loss: Sell to Close 7 Contracts (or 100% of your Contracts) November 1 $185 Puts @ $2.68 Credit. DailyPlay Portfolio:  By Closing all 7 Contracts, we will receive $1,876. We initially opened these 7 Contracts on September 27 @ $2.98 Debit. Our loss on this trade, therefore, is $30 per Contract.
• ABNB – 43.48% loss: Sell to Close 3 Contracts (or 100% of your Contracts) November 1 $133 Calls @ $3.38 Credit. DailyPlay Portfolio:  By Closing all 3 Contracts, we will receive $1,014. We initially opened these 3 Contracts on October 18 @ $6.38 Debit. Our loss on this trade, therefore, is $300 per Contract.
• AKAM – 22.88% loss: Sell to Close 4 Contracts (or 100% of your Contracts) November 8 $101 Calls @ $4.55 Credit. DailyPlay Portfolio:  By Closing all 4 Contracts, we will receive $1,820. We initially opened these 4 Contracts on October 16 @ $5.90 Debit. Our loss on this trade, therefore, is $135 per Contract.
• DIS – 53.57% loss: Sell to Close 14 Contracts (or 100% of your Contracts) November 8 $97 Calls @ $1.30 Credit. DailyPlay Portfolio:  By Closing all 14 Contracts, we will receive $1,820. We initially opened these 14 Contracts on October 21 @ $1.64 Debit. Our loss on this trade, therefore, is $34 per Contract.
• TSLA – 88.28% loss: Sell to Close 3 Contracts (or 100% of your Contracts) November 15 $217.50/$195 Put Vertical Spreads @ $1.00 Credit. DailyPlay Portfolio:  By Closing all 3 Contracts, we will receive $300. We initially opened these 3 Contracts on October 22 @ $8.50 Debit. Our loss on this trade, therefore, is $750 per Contract.

DailyPlay Portfolio Review

Our Trades

ABBV – 4 DTE

Bearish Puts – ABBV (AbbVie Inc.) drifted lower this past week. The anticipated earnings date is 10/30/24, and the gradual rise in implied volatility (IV) as earnings approach has kept our out-of-the-money November 1st put option in play. However, with only 4 days to expiration (DTE) and the stock not quite reaching the strike, it’s time to close the position. We are closing this position today.

ABNB – 4 DTE

Bullish Calls – Not much has changed with our Airbnb, Inc. (ABNB) position since we established it, aside from some initial strong momentum. With earnings scheduled for Thursday, October 30, we’re seeing a gradual increase in implied volatility (IV), which has provided some support to our Buy to Open 3 ABNB Nov 1 $133 Calls, though the stock remains stagnant. With only four days to expiration (DTE) and earnings right around the corner, it’s time to close the position. We are closing this position today.

AKAM – 11 DTE

Bullish Calls – The stock has reversed course, and our long call position is not performing well. With 11 days to expiration (DTE) remaining and earnings scheduled for Thursday, November 7, it’s time to close the position. We are closing this position today.

BMY – 18 DTE

Bullish Calls – Bristol-Myers Squibb Co. (BMY) recently broke out above its trading range and has since stalled, but we’ll keep a close eye on this position. With the upcoming earnings announcement scheduled before the market opens on October 31, 2024, we’re observing a gradual increase in implied volatility, which supports our decision to stay the course for now.

DIS – 11 DTE

Bullish Calls – We rolled this trade a week ago and due to a change in the market direction. We are closing this position today.

JNJ – 32 DTE

Bullish Credit Spread – Johnson & Johnson (JNJ) stock price is trading around the short strike of our put vertical spread. We’ll stay the course for now but will adjust or close in the near term if necessary.

SQ – 25 DTE

Bullish Debit Spread – Block Inc. (SQ) The company’s earnings are expected on November 7th, and there is a good possibility that we will remain in this position through the report.

TSLA – 18 DTE

Bearish Debit Spread – Tesla, Inc. (TSLA) gapped up after the company’s earnings report, and since we were bearish on the trade, it’s time to close the position. We are closing this position today.

VIX Bearish Opening Trade Signal

Investment Rationale

The market has been on quite a ride since early August, with the SPX hitting three new highs: first in mid-August, then mid-September, and now mid-October. Each time, it has pulled back slightly, only to rally again, as if on “buy-the-dip” autopilot. Since the significant downturn in August, the SPX has formed a distinct wedge pattern, indicating uncertainty about its next direction. Meanwhile, the VIX is reminding us that it’s election season. There is considerable buzz about institutions positioning themselves for either a Trump or Harris victory, along with speculation about what rising bond yields might signal for the upcoming election. However, this chatter hasn’t yet shaken up the broader indexes. Until the election results are final, the VIX appears determined to maintain its grip on the market, showing no signs of allowing the market to run free.

Given this outlook, we speculate that the VIX will drift lower after the election results are in. To capitalize on this, we will implement a bearish Long Put Vertical Spread strategy using puts in the VIX index.

VIX – Daily

Trade Details

Strategy Details

Strategy: Long Put Vertical Spread

Direction: Bearish Debit Spread

Details: Buy to Open 12 VIX Nov 20 $19/$16 Put Vertical Spreads @ $1.57 Debit per Contract.

Total Risk: This trade has a max risk of $1,884 (12 Contracts x $157) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $157 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bearish trade on an instrument that is expected to trade lower over the duration of this trade.

1M/6M Trends: Neutral/Neutral

Stop Loss: @ $0.79 (50% loss of premium)

JNJ Bullish Opening Trade Signal

Investment Rationale

Johnson & Johnson (JNJ) rebounded from its $160 support level after breaking above resistance, indicating potential to reach its $170 target. The stock has climbed to around $165, about halfway to that goal. While JNJ is expected to grow slightly slower than the industry average, its superior profitability, including higher net margins, justifies its premium valuation relative to peers. This strong profitability is a key factor supporting the stock’s potential for further upside. In this marketplace, we’re looking at a neutral-to-bullish put vertical spread or a bull put spread, a less aggressive approach that allows us to sell some of the general market volatility.

JNJ – Daily

Trade Details

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish Credit Spread

Details: Sell to Open 5 JNJ Nov 29 $160/$155 Put Vertical Spreads @ $0.83 Credit per Contract.

Total Risk: This trade has a max risk of $2,085 (5 Contracts x $417) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $417 to select the # contracts for your portfolio.

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

1M/6M Trends: Bullish/Bullish

Relative Strength: 8/10

OptionsPlay Score: 135

Stop Loss: @ $1.66 (100% loss to the value of premium received)

View JNJ 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 JNJ Trade

SQ Bullish Opening Trade Signal

Investment Rationale

Block Inc. (SQ) has recently broken out of its trading range with strong momentum, continuing to outperform the S&P 500 and signaling potential upside toward our $80 target. Currently trading between $62.50 and $85, SQ is modestly undervalued at 16x forward earnings compared to the industry average of 27x. While its low-margin business model impacts profitability, SQ’s rapid growth suggests it could reach a more reasonable valuation of 19-20x forward earnings. With increasing investor interest, the stock shows strong growth potential. The company’s earnings are expected on November 7th, and there is a good possibility that we will remain in this position through the report.

SQ – Daily

Trade Details

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish Debit Spread

Details: Buy to Open 5 SQ Nov 22 $70/$80 Call Vertical Spreads @ $4.44 Debit per Contract.

Total Risk: This trade has a max risk of $2,220 (5 Contracts x $444) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $444 to select the # contracts for your portfolio.

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

1M/6M Trends: Bullish/Bullish

Relative Strength: 4/10

OptionsPlay Score: 93

Stop Loss: @ $2.22 (50% loss of premium)

View SQ 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 Tuesday’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 SQ Trade

TSLA Bearish Opening Trade Signal

Investment Rationale

TSLA recently broke down from its trading range with strong momentum an underperforming the S&P 500, providing an opportunity for further downside to our $200 target. After a disappointing Robotaxi reveal, news of Waymo’s expansion, and increased competition in the EV space, TSLA’s prospects are significantly dimmed and its 70x forward earnings poses a significant risk in its valuation.

TSLA – Daily

Trade Details

Strategy Details

Strategy: Long Put Vertical Spread

Direction: Bearish Debit Spread

Details: Buy to Open 3 TSLA Nov 15 $217.50/$195 Put Vertical Spreads @ $7.88 Debit per Contract.

Total Risk: This trade has a max risk of $2,364 (3 Contracts x $788) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $788 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bearish trade on a stock that is expected to break below recent support.

1M/6M Trends: Bearish/Neutral

Relative Strength: 10/10

OptionsPlay Score: 119

Stop Loss: @ $3.94 (50% loss of premium)

View TSLA 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 TSLA Trade

Closing Trades

• AAPL – 59% loss: Buy to Close 7 Contracts (or 100% of your Contracts) November 1 $225/$230 Call Vertical Spreads @ $3.77 Debit. DailyPlay Portfolio:  By Closing all 7 Contracts, we will pay $2,639. We initially opened these 7 Contracts on October 8 @ $2.38 Credit. Our loss on this trade, therefore, is $139 per Contract.
• DIS – 18% gain: Sell to Close 8 Contracts (or 100% of your Contracts) Oct 25/Nov 15 $95 Call Calendars @ $2.89 Credit. DailyPlay Portfolio:  By Closing all 8 Contracts, we will receive $2,312. We initially opened these 8 Contracts on October 11 @ $2.45 Debit. Our gain on this trade, therefore, is $352.

DIS Bullish Rolling/Closing & Opening Trade Signal

Investment Rationale

The Walt Disney Company (DIS): DIS recently broke out above its trading range, and we need to adjust our calendar spread. We are rolling our front-month October calls “up and out” from the $95 strike Calls to the November 8th $97 strike Calls. DIS will be reporting on November 14th, and our back-month options expire the day after the announcement.

By Rolling DIS we are Closing the existing trade and Opening a new one.

DIS – Daily

Trade Details

Strategy Details

Strategy: Long Call Calendar

Direction: Bullish Call Calendars

Details: Buy to Open 14 DIS Oct 25/Nov 8 $97 Call Calendar Spreads @ $1.44 Debit per Contract.

Total Risk: This trade has a max risk of $2,016 (14 Contracts x $144) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $144 to select the # contracts for your portfolio.

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

1M/6M Trends: Bullish/Neutral

Relative Strength: 2/10

OptionsPlay Score: 250

Stop Loss: @ $0.72 (50% loss of premium)

View DIS 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 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. 

View DIS Trade

DailyPlay Portfolio Review

Our Trades

ABBV – 11 DTE

Bearish Puts – ABBV (AbbVie Inc.) drifted lower this past week. The anticipated earnings date is 10/30/24, and the gradual rise in implied volatility (IV) as earnings approach has kept our out-of-the-money November 1st put option in play. However, with only 11 days to expiration (DTE) and the stock not quite reaching the strike, it’s time to close the position.

ABNB – 11 DTE

Bullish Calls – Not much has changed with our Airbnb, Inc. (ABNB) position since we established it, apart from some initial strong momentum. With earnings scheduled for Thursday, October 30th, we are seeing a gradual increase in implied volatility (IV), which has impacted our Buy to Open 3 ABNB Nov 1st $133 Calls. Even though the stock remains stagnant, the rising IV continues to support our strategy. We plan to close the position before the earnings announcement, as we didn’t initiate the trade to take on the risk of the earnings event.

AKAM – 18 DTE

Bullish Calls – We are observing upside momentum building in Akamai Technologies (AKAM) following its recent breakout, and we currently hold a long call position, which is doing well. With 18 days to expiration (DTE) remaining and the upcoming earnings date on Thursday, November 7th, we anticipate an increase in implied volatility due to this known event, which should provide support and help justify our decision to stay the course for now.

BMY – 25 DTE

Bullish Calls – Bristol-Myers Squibb Co. (BMY) recently broke out above its trading range, and the upside momentum has continued. With the upcoming earnings announcement scheduled for before the market opens on October 31, 2024, we are observing a gradual increase in implied volatility due to this known event, which once again helps justify our decision to stay the course for now.

DIS – 4 DTE

Bullish Calendar Spreads – The Walt Disney Company (DIS): DIS recently broke out above its trading range, and we need to adjust our calendar spread. We are rolling our front-month October calls “up and out” from the $95 strike Calls to the November 8th $97 strike Calls. DIS will be reporting on November 14th, and our back-month options expire the day after the announcement.

Closing Trade

META – 79% loss: Sell to Close 4 Contracts (or 100% of your Contracts) October 18 $585/$600/$610 Call Butterfly Spreads @ $0.87 Credit. DailyPlay Portfolio:  By Closing all 4 Contracts, we will receive $480. We initially opened these 24 Contracts on October 10 @ $4.18 Debit. Our loss on this trade, therefore, is $331 per Contract.

ABNB Bullish Opening Trade Signal

Investment Rationale

Airbnb, Inc. (ABNB) recently broke out above its trading range with strong momentum, outperforming the S&P 500 and presenting further upside potential toward our $145 target. While ABNB trades at a premium compared to its peers, it is expected to deliver faster top and bottom-line growth, and it remains significantly more profitable, making it modestly undervalued. With earnings scheduled for Thursday, October 30th, we will incorporate the anticipated increase in implied volatility from this event into our strategy selection.

ABNB – Daily

Trade Details

Strategy Details

Strategy: Long Call

Direction: Bullish Calls

Details: Buy to Open 3 ABNB Nov 1st $133 Calls @ $5.98 Debit per Contract.

Total Risk: This trade has a max risk of $1,794 (3 Contracts x $598) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $598 to select the # contracts for your portfolio.

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

1M/6M Trends: Bullish/Neutral

Relative Strength: 3/10

OptionsPlay Score: 81

Stop Loss: @ $2.99 (50% loss of premium)

View ABNB 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 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. 

View ABNB Trade

Closing Trade

• MMM – 84% loss: Sell to Close 24 Contracts (or 100% of your Contracts) October 18 $135/$131 Put Vertical Spreads @ $0.20 Credit. DailyPlay Portfolio:  By Closing all 24 Contracts, we will receive $480. We initially opened these 24 Contracts on October 1 @ $1.25 Debit. Our loss on this trade, therefore, is $105 per Contract.

Investment Rationale

As we approach expiration MMM has rallied above our $135 resistance level and warrants closing out this trade just before expiration.