XOM Bullish Opening Trade Signal/ Trade Adjustment

Investment Rationale

Buy an extra November 1 $125 Call. I would prefer to pay $1.54 for the extra call, which is the net credit received from the initial credit spread. This makes the debit for the long call equal to the net credit received from the initial trade, putting us at even as far as debits and credits are concerned.

I like to call this strategy, “I don’t want the cheese anymore; just get me out of the trap.” If we break significantly above $120, the trade could become profitable – the sooner, the better for that breakout to the upside. If the stock pulls back and declines, we’ll likely let everything expire worthless, and in that case, we would break even on the entire position.

If you let too much time pass and the stock drifts up, that’s a bad outcome. We still have a short spread from $120 to $125 at expiration, and if we ride it all the way to expiration and the stock stops at $125, the extra long call does not help.

XOM – Daily

Trade Details

Strategy Details

Strategy: Long Call

Direction: Bullish Call

Details: Buy to Open 6 XOM November 1 $125 Calls @ $1.61 Debit per Contract.

Total Risk: This trade has a max risk of $966 (6 Contracts x $161) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $161 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bullish trade on a stock that is in a bullish trend.

1M/6M Trends: Bullish/Bullish

Relative Strength: 4/10

OptionsPlay Score: 51

Stop Loss: @ $0.81 (50% loss of premium)

View XOM 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 XOM Trade

MMM Bearish Opening Trade Signal

Investment Rationale

3M Company (MMM) has recently entered overbought territory on both daily and weekly timeframes, indicating signs of exhaustion and suggesting an increased likelihood of a selloff. While MMM is expected to grow EPS faster than its industry peers, negative revenue growth and slim margins pose significant downside risks, making it challenging for the company to meet these projections.

MMM – Daily

Trade Details

Strategy Details

Strategy: Long Put Vertical Spread

Direction: Bearish Debit Spread

Details: Buy to Open 24 MMM October 18 $135/$131 Put Vertical Spreads @ $0.86 Debit per Contract.

Total Risk: This trade has a max risk of $2,064 (24 Contracts x $86) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $86 to select the # contracts for your portfolio.

Counter Trend Signal: This is a bearish trade on a stock that formed a bearish divergence and is expected to continue lower.

1M/6M Trends: Bullish/Bullish

Relative Strength: 10/10

OptionsPlay Score: 160

Stop Loss: @ $0.43 (50% loss of premium)

View MMM 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 MMM Trade

DailyPlay Portfolio Review

Our Trades

ABBV – 32 DTE

Bearish Puts – Our immediate downside target for ABBV is $182, but if we breakout above $200 we would cut losses and move on. So far it is still holding below its $195 support and maintains its downside potential as it continues to underperform relative to the market. 

ALL – 18 DTE

Bullish Credit Spread – Allstate Corp. (ALL) remains in a moderately bullish trend, supported by strong fundamentals, so we’re staying the course with our position.

SHOP – 18 DTE

Bullish Calendar Spreads – Shopify (SHOP) remains bullish after its recent breakout, with expectations of continued upward momentum. With earnings set for early November, we’ve factored this into our option strategy and are staying the course.

XOM- 32 DTE

Bearish Credit Spread – Exxon Mobil Corp. (XOM) remains below the $117 resistance level and continues to drift lower, so we’re staying the course with our position.

DHI- 5 DTE

Bullish Calls and Combo – If you have not closed both positions yet, please do so today.

Closing Trades

• CLX – 28.79% gain: Sell to Close 7 Contracts (or 100% of your Contracts) Oct 18th $165 Puts @ $4.25 Credit. DailyPlay Portfolio:  By Closing all 7 Contracts, we will receive $2,975. We initially opened these 7 Contracts on September 17 @ $3.30 Debit. Our gain, therefore, is $665.
• PYPL – 102.22% gain: Sell to Close 19 Contracts (or 100% of your Contracts) Oct 18th $70/$75 Call Vertical Spreads @ $4.55 Credit. DailyPlay Portfolio:  By Closing all 19 Contracts, we will receive $8,645. We initially opened 11 Contracts on August 20 @ $1.99 Debit and then another 8
  Contracts on September 3 @ $2.61 Debit. Our gain, therefore, is $4,370 which is over 4% gain on our total Portfolio.

ABBV Bearish Opening Trade Signal

Investment Rationale

AbbVie Inc.(ABBV) recently broke below its trading range with strong momentum, underperforming the S&P 500. This breakdown suggests potential for further downside, with a target price of $183.

Although projected growth is in line with industry averages and net margins are comparable, ABBV trades at a 20% premium relative to its peers, presenting a significant downside risk.

ABBV – Daily

Trade Details

Strategy Details

Strategy: Long Put

Direction: Bearish Put

Details: Buy to Open 7 ABBV November 1 $185 Puts @ $291 Debit per Contract.

Total Risk: This trade has a max risk of $2,037 (7 Contracts x $291) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $291 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bearish trade on a stock that recently broke below its trading range and is expected to continue lower.

1M/6M Trends: Mildly Bearish/Bullish

Relative Strength: 5/10

OptionsPlay Score: 58

Stop Loss: @ $146 (50% loss of premium)

View ABBV 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 ABBV Trade

ALL Bullish Opening Trade Signal

Investment Rationale

Allstate Corp. (ALL) is undervalued, with strong fundamentals, including a 12.00% annual sales growth rate and a projected earnings growth rate of 19.00%. Its low P/E ratio of 12.06 and a dividend yield of 1.94%, along with a strong dividend growth rate of 14.00%, further enhance its attractive valuation.

ALL remains in a strong bullish trend with its recent pullback to its $190 support level provides an attractive risk to reward for seeking long exposure.

ALL – Daily

Trade Details

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish Credit Spread

Details: Sell to Open 5 ALL October 18 $185/$180 Put Vertical Spreads @ $90.00 Credit per Contract.

Total Risk: This trade has a max risk of $2,050 (5 Contracts x $410) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $410 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bullish trade on a stock that is currently in a strong bullish trend and with fundamental views aligned to the upside.

1M/6M Trends: Bullish/Bullish

Relative Strength: 8/10

OptionsPlay Score: 88

Stop Loss: @ $180 (100% loss to the value of premium)

View ALL 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 ALL Trade

Closing Trades

• UBER – 90% gain: Buy to Close 8 Contracts (or 100% of your Contracts) Oct 4th $69/$66 Put Vertical Spreads @ $0.05 Debit. DailyPlay Portfolio:  By Closing these Contracts, we will pay $40. We initially opened these 8 Contracts on September 66 @ $0.47 Credit. Our gain, therefore, is $336.
• DHI – 20.93% loss: Sell to Close 1 Contract (or 100% of your Contracts) Oct 4th $182.50/$207.50 Rish Reversal @ $0.52 Credit. DailyPlay Portfolio:  By Closing this Contract, we will receive $52. We initially opened this Contract on September 18 @ $0.43 Debit. Our loss, therefore, is $9.
• DHI – 13.41% loss: Sell to Close 1 Contract (or 100% of your Contracts) Jan 17th $170 Call @ $29.70 Credit. DailyPlay Portfolio:  By Closing this Contract, we will receive $2,970. We initially opened this Contract on September 19 @ $34.30 Debit. Our loss, therefore, is $460.

Investment Rationale

Our CLX trade is staying on course with these Puts as the stock recently dropped to 161.28 (low on 9/19) from 165.95 so it might have doubled on that day. For now we are keeping these trades open as we still have 23 days left until.

We are closing our UBER trade today for $0.05 Debit. There are still 9 days left until expiry so makes sense to close for a nickel today.

DHI closed at $192.37. The stock ran up to 199.85 on the 19th and was at $195.35 when we put the trade on. I most likely would not have sold the call on that day; however, it has sadly reversed course and is now at $192.37 as of September 24. With only 9 days left for the options to expire, we can still sell the call for $0.30 at the midpoint, and I would do that. Additionally, I would buy back the short put at the midpoint price of $0.80, only because we bought the deep-in-the-money call in DHI the very next day, which gives us long exposure to DHI. It is only a 1×1 spread, so let’s close this trade and be done with it. If we hadn’t bought the long call, I would just stay the course.

XOM Bearish Opening Trade Signal

Investment Rationale

XOM recently broke down below its trading range and has rallied back to its $117 resistance, providing an attractive risk/reward entry for bearish exposure. With revenue decline expected, EPS growth that is inline and Net margins below the industry average, XOM trades at a 13% premium relative to its industry suggesting possible downside. The stock has struggled to break out above 120. In fact, it hasn’t stayed above that level for a substantial amount of time since the end of April.

XOM – Daily

Trade Details

Strategy Details

Strategy: Short Call Vertical Spread

Direction: Bearish Credit Spread

Details: Sell to Open 6 XOM November 1 $120/$125 Call Vertical Spreads @ $154 Credit per Contract.

Total Risk: This trade has a max risk of $2,076 (6 Contracts x $346) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $346 to select the # contracts for your portfolio.

Counter Trend Signal: This is a bearish trade on a stock that is currently bullish and expected to pull back from recent highs.

1M/6M Trends: Bullish/Bullish

Relative Strength: 5/10

OptionsPlay Score: 99

Stop Loss: @ $308 (100% loss to the value of premium)

View XOM 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 XOM Trade

Closing Trades

• ADBE – 101.90% loss: Buy to Close 1 Contract (or 100% of your Contracts) Oct 25th $570/$530 Put Vertical Spread @ $29.68 Debit. DailyPlay Portfolio:  By Closing this Contract, we will pay $2,968. We initially opened this Contract on September 11 @ $14.70 Credit. Our loss, therefore, is $1,498.
• MAR – 126.14% loss: Buy to Close 4 Contracts (or 100% of your Contracts) Oct 4th $225/$235 Call Vertical Spreads @ $9.95 Debit. DailyPlay Portfolio:  By Closing these 4 Contracts, we will pay $3,980. We initially opened these 4 Contracts on August 27 @ $4.40 Credit. Our loss, therefore, is $555 per Contract.

SHOP Bullish Opening Trade Signal

Investment Rationale

Shopify (SHOP) recently broke out of its trading range and has since pulled back to the $67 support level, offering an attractive risk/reward opportunity for bullish exposure. With an EV-to-forward revenue ratio of 8x, in line with the industry average, Shopify’s valuation is well-supported by its significantly higher earnings per share (EPS) growth of 185% and revenue growth of 21%, compared to the industry. This makes the stock appear fairly valued. As the company is set to announce earnings in early November, we have factored this upcoming event into the selection of our option strategy.

SHOP – Daily

Trade Details

Strategy Details

Strategy: Long Call Calendar Spread

Direction: Bullish Long Call Calendar

Details: Buy to Open 7 SHOP Oct 18, 2024/Nov 15, 2024 $85 Call Calendar @ $283.00 Debit per Contract.

Total Risk: This trade has a max risk of $283 (7 Contract x $1,981) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $298 to select the # contracts for your portfolio.

Trend Continuation Signal: Momentum is bullish on SHOP following its recent breakout above the trading range, with expectations that the upward trend will continue.

1M/6M Trends: Bullish/Bullish

Relative Strength: 5/10

OptionsPlay Score: 59

Stop Loss: @ $142 (50% loss to the value of premium)

View SHOP 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 SHOP Trade

DHI Bullish Opening Trade Signal

Investment Rationale

The CME FedWatch tool indicated this week about a 50/50 chance between a 25 basis point cut and a 50 basis point cut. Rumor has it that someone eavesdropping outside the FOMC meeting overheard Chair Powell quip, “hold my beer,” as the Fed went ahead and announced their decision to cut the Fed funds rate by 50 basis points. The Federal Reserve also signaled plans for two more rate cuts later this year, followed by an additional four cuts in 2025.

Regarding yesterday’s Daily Play in D.R. Horton (DHI), the larger cut implies that mortgage rates will most likely decrease more rapidly. The stock drifted lower during the session, and our FOMO trade from yesterday is still alive and performing reasonably well. Given the Fed’s decision to cut by 50 basis points, along with the technical and fundamental outlook, we decided to build on yesterday’s trade and initiate another position in DHI for today’s trade.

DHI – Daily

Trade Details

Strategy Details

Strategy: Long-Term Deep In-The-Money Call

Direction: Bullish Long Call

Details: Buy to Open 1 DHI Jan 17, 2025 $170 Call @ $31.80 Debit per Contract.

Total Risk: This trade has a maximum risk of $3,180. We are using the option contract as a substitute for buying 100 shares of stock. The delta of the option is 0.80, which provides a good representation of the stock price movement. The concept behind this trade is to reduce risk compared to using all the capital to purchase 100 shares of stock. This way, the risk would be limited to the price you paid for the call option, or about 16% of the cost to buy 100 shares of stock. The number of contracts to purchase would depend on your plan for the outright stock purchase. For example, if your intention was to buy 300 shares, you would buy 3 option contracts. If you were looking to buy 200 shares, you would buy 2 option contracts, and so on.

Trend Continuation Signal: A bullish trade on a stock that has broken out of its trading range with strong momentum.

1M/6M Trends: Bullish/Bullish

Relative Strength: 9/10

OptionsPlay Score: 82

Stop Loss: @ $15.90 credit (50% loss of premium)

View DHI 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 DHI Trade

DHI Bullish Opening Trade Signal

Investment Rationale

The Federal Reserve is poised to cut interest rates today for the first time in four years. This policy shift could significantly impact market dynamics across various sectors, but none more so than the housing industry. Lower rates reduce borrowing costs, making mortgages more affordable and potentially boosting home demand. For example, the average 30-year mortgage rate dropped to 6.2% last week, its lowest in 18 months, down from nearly 7.8%, according to Freddie Mac.

For today’s trade in DHI, industry professionals might refer to it as a Combo or Risk Reversal strategy, but we call it the “FOMO Strategy” (Fear of Missing Out). We prefer to implement this strategy in a potential “buy the rumor, sell the news” scenario, which we fear might be the case with the housing sector in general.

DHI – Daily

Trade Details

Strategy Details

Strategy: Risk Reversal (Short Put and Long Call)

Direction: Bullish

Details: Buy to Open 1 DHI Oct 4 $182.5/$207.5 Put/Call Risk Reversal @ $7.00 net Credit per Contract.

Total Risk: This trade has a maximum risk of $18,243. It is typically executed on a cash-secured basis, meaning you would be willing to buy 100 shares of DHI at the put strike price of $182.50 (100 x 182.50 = $18,250) and then subtract the net credit of $7, resulting in a maximum risk of $18,243.

Trend Continuation Signal: A bullish but nervous trade on a stock that has broken out of its trading range with strong momentum but could be in a potential “buy the rumor, sell the news” scenario.

1M/6M Trends: Bullish/Bullish

Relative Strength: 9/10

OptionsPlay Score: 250

Stop Loss: N/A

View DHI 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 DHI Trade