DailyPlay Update – Roll ORCL

Our ORCL Feb 16 $105/$120 call vertical is currently up 132.9%. This provides us with an opportunity to roll this trade. By rolling this debit spread, we can use the proceeds from this trade to fund a new ORCL trade at minimal cost. Rolling simply involves 2 steps:

1. Closing the current trade for a 132.9% gain. This provides us with a profit of $4.16 (per share) for this trade (current market price $7.29 – cost basis of $3.13)
2. Opening a new ORCL trade with the trade details below. The original cost basis for the new ORCL position is $4.17. By using the profit from the original trade of $4.16, the resulting cost basis is $0.01. This means that we can gain further upside exposure in ORCL for a risk of only $0.01 per share (essentially a free debit spread)

Closing Trade

• ORCL – 132.91% Gain: Sell to Close 7 Contracts (or 100% of your Contracts) Feb 16th $105/$120 Call Vertical Spreads @ $7.29 Credit. DailyPlay Portfolio: By Closing all 7 Contracts, we will be receiving $5,103. We initially opened these 7 Contracts on Dec 18 @ $3.13 Debit. Our average gain is $416 per contract. 

ORCL Opening Trade Signal

View ORCL Trade

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish Debit Spread

Details: Buy to Open 7 Contracts Mar 15th $110/$120 Call Vertical Spreads @ $4.17 Debit per contract. By using the proceeds from the closing trade of $4.16, the actual cost basis is now $0.01 per contract. 

Total Risk: This trade has a max risk of $7 (7 Contracts x $1).

Trend Continuation Signal: This is a rolling trade on a stock that is currently experiencing a bullish trend.

1M/6M Trends: Bullish/Bullish

Relative Strength: 5/10

OptionsPlay Score: 250

Stop Loss: There is no stop loss for this trade as it is essentially a free debit spread with a total risk of $1.00 per contract.

Entering the Trade

Please note – As this is a rolling trade and we have already made a profit of $4.16 on the previous ORCL trade, the actual cost basis is $0.01 as we are using the profit from the first ORCL trade to fund the new ORCL debit spread. 

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 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. 

Investment Rationale

As Semiconductor optimism has overshadowed earnings season so far with both the Nasdaq 100 and S&P 500 rallying further into all-time high territory. Rotation into the technology sector has been strong since Friday and has shifted market sentiment to “risk-on” despite the US 10-year yield moving higher. Fed futures are now only pricing in a 50% probability that the Fed will cut interest rates by 25 points in the March meeting, compared to the 75% probability one month ago. This may provide a headwind leading to the March Fed meeting but the short-term rally in the Technology Sector provides an opportunity to maximize our current open positions in the DailyPlay portfolio.

We will look to roll our existing ORCL Feb 16 $105/$120 Call Vertical up and out to the Mar 15 $110/$120 Call Vertical. By using the $4.16 net profit per contract on the original ORCL position to offset the cost basis of the new ORCL position on $4.17, the resulting net cost basis is now $0.01 per contract, which essentially provides us with a free debit spread to gain further upside with little to no risk should ORCL decline.

ORCL – Daily

Closing Trade

• CSCO – 56.98% Gain: Sell to Close 22 Contracts (or 100% of your Contracts) Jan 19th $47.50 Calls @ $2.76 Credit. 
  DailyPlay Portfolio:  By Closing all 22 Contracts, we will receive $6,072 Credit. We initially opened 14 Contracts on Nov 30 $1.46 Debit and then 8 Contracts on Dec 12 @ $1.76 Debit. Our average gain, therefore, is $119 per contract. 

Closing Trades

• BMY – 65.47% Gain: Sell to Close 14 Contracts (or 100% of your Contracts) Jan 19th $50/$55 Call Vertical Spreads @ $2.28 Credit. DailyPlay Portfolio: By Closing all 14 Contracts, we will receive $3,192 Credit. We initially opened these 14 Contracts on Dec 4 @ $1.44 Debit. Our average gain, therefore, is $84 per contract. 
• ZM – 75.46% Gain: Buy to Close 6 Contracts (or 100% of your Contracts) Jan 26th $72/$77 Call Vertical Spreads @ $0.40 Debit. DailyPlay Portfolio: By Closing all 6 Contracts, we will be paying $240 Debit. We initially opened these 6 Contracts on Dec 19 @ $1.63 Credit. Our average gain, therefore, is $123 per contract. 

Dear Valued Member

We hope you are having a great start to your new year. Starting January 5th, 2024, OptionsPlay will temporarily pause the distribution of DailyPlays until January 15th as we work diligently to enhance our trading strategy as we move into 2024. We will still manage our open trades so you may expect some of them to be closed during this period. We will also resume our webinars next week, starting with our Monday Macro Market Outlook webinar. There will be no Market Outlook webinar for today and you will receive a daily email with the Market Outlook during this period.

Our team is committed to providing you with the best trade recommendations, and this short pause will allow us to refine our approach, analyze market trends, and implement advanced strategies to ensure you receive more accurate and valuable insights. We will keep you updated on our progress and look forward to resuming the DailyPlays service soon. 

As we now have close to 100,000 subscribers, we thank everyone for your support. Please feel free to reach out to us via [email protected] or with the Ask Us button on the platform with any suggestions, questions, or concerns you may have. Your input will be greatly appreciated and carefully considered.

Thank you for your continued trust in OptionsPlay.

The OptionsPlay Team

GE Bearish Opening Trade Signal

View GE Trade

Strategy Details

Strategy: Short Call Vertical Spread

Direction: Bearish Credit Spread

Details: Sell to Open 6 Contracts Feb 16th $130/$135 Call Vertical Spreads @ $1.89 Credit per contract.

Total Risk: This trade has a max risk of $1,866 (6 Contracts x $311) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $311 to select the # contracts for your portfolio.

Counter Trend Signal: This is a bearish trade on a stock that is currently bullish but at an overbought condition.

1M/6M Trends: Bullish/Bullish

Relative Strength: 9/10

OptionsPlay Score: 103

Stop Loss: @ $3.78 Debit. (100% loss to the value of premium received)

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 first trading day of 2024 looks like it may start off on a negative note with futures trading lower this morning. This comes after a very strong end to 2023 that saw equities rally significantly across the board. Market structure remains bullish, but the extended equity rally is at risk of a short-term retracement lower. Interest rates continue to act as the main theme, with investors now pricing in three rate cuts in 2024, however, this is still largely dependent on inflation and jobs/employment data with Nonfarm payrolls set to be released this Friday. 

Our bearish DailyPlay for today is General Electric (GE). GE has shown negative divergence with momentum indicators making lower lows while price continues to make higher highs – a strong bearish signal. While price structure is bullish, the daily timeframe indicates that the current rally is over-extended which provides an opportunity to fade GE and take advantage of the higher probability of a retracement lower. From a fundamental perspective, GE’s price/forward earnings ratio currently sits at 53.76, significantly higher than where the price/forward earnings ratio was between 16 and 27 over the last 5 years. 

We will look to Sell the Feb 16th $130/$135 Call Vertical @ $1.89 Credit. With a hypothetical portfolio of $100,000, we recommend risking 2% of the portfolio’s value to this trade, which is 6 Contracts for a risk of $1,866. We will set a stop loss on the put spread at around 100% loss to the value of the premium received @ $3.78 Debit. 

GE – Daily

As the trading year shifts to a close, equities experienced some consolidation in recent weeks slowing down the momentum from early December. However, the risk-on sentiment remains strong in markets as the pricing in of a dovish Fed, and potentially up to 3 interest rate cuts in 2024, continues to provide a tailwind. Fed futures indicate that rates will hold steady for the next Fed meeting on January 31st. The first 25 point rate cut, based on Fed futures, looks set to go ahead in the March Fed meeting with a 73% probability of this occurring. Once again, it is almost time for another earnings season with Q4 earnings kicking off in the 2nd week of January lead by the banking giants. Analysts are expecting a 2.4% earnings growth rate for companies in the S&P. 

Our DailyPlay portfolio weighs more to the bullish side with six bullish positions and one bearish position. This largely reflects our sentiment heading into 2024. We will continue to monitor for new positions and opportunities to close out existing positions once they reach our TP/SL thresholds. 

DXCM Bullish Opening Trade Signal

View DXCM Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 3 Contracts Feb 16th $120/$110 Put Vertical Spreads @ $3.30 Credit per contract.

Total Risk: This trade has a max risk of $2,010 (3 Contracts x $670) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $670 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bullish trade on a stock that is currently bullish but has recently pulled back to provide an entry.

1M/6M Trends: Bullish/Bullish

Relative Strength: 7/10

OptionsPlay Score: 90

Stop Loss: @ $6.60 Debit. (100% loss to the value of premium received)

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. 

Investment Rationale

The week before the new year tends to be quiet as there is a lack of fundamental catalysts to provide volatility. However, we have seen equities moving higher after a short-term pullback with the S&P just shy of all-time highs and the Nasdaq-100 now trading at all-time highs. With yields continuing to decline, equities continue to take advantage of the tailwind in the current risk-on environment. This provides bullish opportunities heading into the new year as momentum remains strong. 

We will look to Sell the Feb 16th $120/$110 Put Vertical @ $3.30 Credit. With a hypothetical portfolio of $100,000, we recommend risking 2% of the portfolio’s value to this trade, which is 3 Contracts for a risk of $2,010. We will set a stop loss on the put spread at around 100% loss to the value of the premium received @ $6.60 Debit. 

DXCM – Daily

Closing Trade

• ALL – 49.06% Gain: Buy to Close 6 Contracts (or 100% of your Contracts) Jan 19th $140/$145 Call Vertical Spreads @ $1.08 Debit. DailyPlay Portfolio: By Closing all 6 Contracts, we will be paying $648. We initially opened these 6 Contracts on Dec 5 @ $2.12 Credit. Our average gain, therefore, is $108 per contract. 

Investment Rationale

The major indices experienced a minor pullback from all-time high territory this week but price action still remains bullish as markets continue to price in a more dovish than expected Fed from last week’s meeting indicating that there would be 3 interest rate cuts instead of 2. While this does bode well for equities, we see signs of concern regarding 2024 consumer demand as Nike has cut their annual revenue forecast. 

Closing Trade

• PLTR – 59.40% Loss: Buy to Close 12 Contracts (or 100% of your Contracts) Jan 19th $20/$17 Put Vertical Spreads @ $2.12 Debit. DailyPlay Portfolio: By Closing all 12 Contracts, we will be paying $2,544. We initially opened these 12 Contracts on Nov 28 @ $1.33 Credit. Our average loss, therefore, is $79 per contract. 

Investment Rationale

With the S&P500 and Nasdaq-100 pulling back from recent highs, PLTR has also pulled back thereby canceling our bullish thesis on this trade. PLTR broke below support at $18 on the back of the larger pullback. We will therefore close this position at 59.40% loss.

Closing Trade

ROKU – 53.16% Loss: Buy to Close 3 Contracts (or 100% of your Contracts) Jan 26th $106/$93 Put Vertical Spreads @ $8.47 Debit. DailyPlay Portfolio: By Closing all 3 Contracts, we will be paying $2,541. We initially opened these 3 Contracts on Dec 11 @ $5.53 Credit. Our average loss, therefore, is $294 per contract. 

Investment Rationale

Equities continue to rally now flirting with all time high territory for both the S&P and Nasdaq-100 as we approach the end of the year. With a dovish Fed, sentiment is bullish heading into 2024 as 3 interest rate cuts are now expected instead of the 2 cuts that markets were pricing in over recent weeks. Futures move lower this morning as FedEx cuts their annual revenue forecast. We will monitor any pullbacks for additional buying opportunities.

ROKU broke below the $100 level and invalidated our bullish thesis on the stock. Therefore, we will be closing this position for a 53% loss. 

ZM Bearish Opening Trade Signal

View ZM Trade

Strategy Details

Strategy: Short Call Vertical Spread

Direction: Bearish

Details: Sell to Open 6 Contracts Jan 26th $72/$77 Call Vertical Spreads @ $1.63 Credit per contract.

Total Risk: This trade has a max risk of $2,022 (6 Contracts x $337) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $337 to select the # contracts for your portfolio.

Counter Trend Signal: This is a bearish trade on a stock that is currently bullish but trading at resistance..

1M/6M Trends: Bullish/Bullish

Relative Strength: 7/10

OptionsPlay Score: 94

Stop Loss: @ $3.26 Debit. (100% loss to the value of premium received)

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. 

Investment Rationale

As equities continue to rally into overbought territory, we look to balance our DailyPlay portfolio with a bearish position. As such, we are looking into Zoom Video Communications (ZM). ZM is underperforming relative to the market and has reached a multi-month area of resistance at $74, as recently, its price action has shown multiple rejections of that level. Price has therefore been rangebound since March, indicating that a pullback is likely. Risk/reward favors the downside, so we will use this opportunity to collect a premium by playing a bearish Credit Spread.

We will look to Sell the Jan 26th $72/$77 Call Vertical @ $1.63 Credit. With a hypothetical portfolio of $100,000, we recommend risking 2% of the portfolio’s value to this trade, which is 6 Contracts for a risk of $2,022. We will set a stop loss on the put spread at around 100% loss to the value of the premium received @ $3.26 Debit. 

ZM – Daily