Closing Trade

• JPM – 31.33% Gain: Sell to Close 6 Contracts (or 100% of your Contracts) Nov 10th $146/$155 Call Vertical Spreads @ $4.15 Credit. DailyPlay Portfolio: By Closing all 6 Contracts, we will receive $2,490. We initially opened these 6 Contracts on Oct 10 @ $3.16 Debit. Our average gain, therefore, is $99 per contract. 

MCD Bullish Opening Trade Signal

View MCD Trade

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish

Details: Buy to Open 3 Contracts Dec 15th $250/$270 Call Vertical Spreads @ $6.55 Debit per contract.

Total Risk: This trade has a max risk of $1,965 (3 Contracts x $655) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $655 to select the # contracts for your portfolio.

Counter Trend Signal: This is a Bullish trade on a stock that found support and is expected to break out higher.

1M/6M Trends: Bearish/Bearish

Relative Strength: 3/10

OptionsPlay Score: 111

Stop Loss: @ $3.25 Credit. (50% loss of premium paid)

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

Price action on the S&P 500 left a lot to be desired at the end of last week. Bears managed to take control on Friday and close just below the key $4300 level and below the base line on the weekly cloud model. This maintains the bear case for the markets down to the $4100 downside target unless bulls can push the markets above $4380. While JPM jumped higher on earnings, price action was poor all day pushing it back towards the lows of the day. We are going to close the full JPM position and take profits here with less than 3 weeks to expiration. 

One emerging trend that I am starting to see are buying opportunities on severely oversold consumer stocks. MCD is an example of this, shedding 17% of its value over the past 3 months and now trading at just over 21x forward earnings which is a 15% discount to its historical average. Recently price has continued to move lower but momentum has started to diverge and showing signs of exhaustion to the downside. I see this as an opportunity to take a long position in MCD at a reasonable valuation near a possible trading bottom. Buy Dec $250/270 Call Vertical @ $6.55 Debit. With a hypothetical portfolio of $100,000, I recommend risking 2% of the portfolio’s value to this position, which is 3 Contracts for a risk of $1,965. We will set a stop loss on the call spread at around 50% of the premium paid @ $3.25 Credit.

MCD – Daily

Closing Trade

• SBUX – 31.80% Gain: Buy to Close 6 Contracts (or 100% of your Contracts) Nov 3rd $93/$99 Call Vertical Spreads @ $1.78 Debit. DailyPlay Portfolio: By Closing all 6 Contracts, we will be paying $1,068. We opened these 6 Contracts on September 22 @ $2.45 Credit. Our average gain, therefore, is $67 per contract. 

SBUX Bearish Opening Trade Signal

View SBUX Trade

Strategy Details

Strategy: Short Call Vertical Spread

Direction: Bearish

Details: Sell to Open 5 Contracts Nov 24th $92/$98 Call Vertical Spreads @ $2.22 Credit per contract..

Total Risk: This trade has a max risk of $1,890 (5 Contracts x $378) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $378 to select the # contracts for your portfolio.

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

1M/6M Trends: Bearish/Bearish

Relative Strength: 3/10

OptionsPlay Score: 99

Stop Loss: @ $4.44 Debit (100% loss of premium collected.)

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. 

Investment Rationale

Momentum on the rally for the S&P 500 has slowed and is now again testing its key $4300 level as support. We closely watching to see markets can hold this level to close out the week. Bulls need to hang onto this level to maintain a neutral stance on the market in order to potentially push higher. As we evaluate our portfolio, SBUX has approached the 21 day mark, which is when we need to start managing a credit spread as the Gamma risk starts to outweigh the acceleration we receive from Theta. Even though it has not quite yet reached our 50% profit target, we are going to take profits on our current position and roll this out to the Nov 24 $92/$98 Call Vertical @ $2.22 Credit. With a hypothetical portfolio of $100,000, I recommend risking 2% of the portfolio’s value to this roll, which is 5 Contracts for a risk of $1,890. We will set a stop loss on the put spread at around 100% of the premium collected @ $4.44 Debit.

SBUX – Daily

AI Chip Opportunity

View AMD Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 3 Contracts Nov 24th $108/$98 Put Vertical Spreads @ $3.83 Credit per contract.

Total Risk: This trade has a max risk of $1,851 (3 Contracts x $617) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $617 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a Bullish trade on a stock that found support and is expected to bounce higher.

1M/6M Trends: Bullish/Bullish

Relative Strength: 9/10

OptionsPlay Score: 91

Stop Loss: @ $7.65 Debit (100% loss of premium collected)

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. 

Investment Rationale

As the AI hype starts to fizzle out, comes opportunity as initial stocks that were bid up trade back to more reasonable levels. This gives us an opportunity to add some long exposure with more favorable risk/reward ratios. AMD, which expects to ship around 10% of the AI chips that market leader NVDA is the underdog to bet on with the recent pullback. With over 700% growth in their AI chips shipped in Q2, AMD is likely to cement itself as the 2nd largest AI chips supplier globally. Trading at 26x forward earnings, it trades at substantial discount to NVDA and the pullback to its $100 support level provides favorable timing to add long exposure now. As implied volatility on AMD is still very elevated, we’ll start with selling the Nov 24 $108/$98 Put Vertical @ $3.83 Credit. With a hypothetical portfolio of $100,000, I recommend risking 2% of the portfolio’s value to this trade, which is 3 Contracts for a risk of $1,851. We will set a stop loss on the put spread at around 100% of the premium collected @ $7.65 Debit.

AMD – Daily

Closing Trade

INDA – 14.27% Loss: Sell to Close 20 Contracts (or 100% of your Contracts) Oct 20th $43 Calls @ $1.73 Credit. DailyPlay Portfolio: By Closing all 20 Contracts, we will receive $3.468.

INDA Bullish Opening Trade Signal

View INDA Trade

Strategy Details

Strategy: Long Call

Direction: Bullish

Details: Buy to Open 20 Contracts Dec 15th $44 Calls @ $1.63 Debit per contract.

Total Risk: This trade has a max risk of $3,260 (20 Contracts x $163) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $163 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a Bullish trade on a stock that found support and is expected to bounce higher.

1M/6M Trends: Bullish/Bullish

Relative Strength: 9/10

OptionsPlay Score: 84

Stop Loss: @ $0.75 Credit (50% loss of premium paid.)

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

As our INDA position is approaches 10 days until expiration, we still believe strongly in this Macro theme of India’s outperform in Asian markets. With this it is time to roll up and out to the Dec $44 strike call. For those who are new to placing a roll order, we are effectively closing the Oct $43 Calls ($.173 Credit) that we own and buying the Dec $44 Calls ($1.63 Debit) for a net credit for $0.10. For the 20 contracts that we own this locks in a $200 credit while extending our time horizon to Dec 2023. Since this is a position that we added to after it broke out above $44, we will maintain 20 contracts of the Dec $44 Calls for an effective net price of $1.53 Debit. We will set a stop loss on the calls at around 50% of the premium paid @ $0.75 Credit.

JPM Bullish Opening Trade Signal

View JPM Trade

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish

Details: Buy to Open 6 Contracts Nov 10th $146/$155 Call Vertical Spreads @ $3.16 Debit per contract.

Total Risk: This trade has a max risk of $1,896 (6 Contracts x $316) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $316 to select the # contracts for your portfolio.

Counter Trend Signal: This is a Bullish trade on a stock that found support and is expected to bounce higher.

1M/6M Trends: Bearish/Neutral

Relative Strength: 9/10

OptionsPlay Score: 98

Stop Loss: @ $1.60 Credit (50% loss of premium paid.)

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

We head into another start of earnings season with the banks reporting at the end of this week. As interest rates climb, banks potentially are primed to benefit from that as interest income rise. JPM has been best positioned for the past few years as best in breed and its recent selloff to its $144 support level provides an opportunity to buy just before earnings. I’m looking for a strong earnings to potentially propel JPM towards our $155 upside target. With options premiums on the expensive side, we have to use a debit spread structure to take advantage of earnings. I’m looking to buy the Nov $146/155 Call Vertical @ $3.16 Debit. With a hypothetical portfolio of $100,000, I recommend risking 2% of the portfolio’s value to this trade, which is 6 Contracts for a risk of $1,896. We will set a stop loss on the put spread at around 50% of the premium paid @ $1.60 Credit.

JPM – Daily

Closing Trade

• CRWD – 70.51% Gain: Buy to Close 3 Contracts (or 100% of your Contracts) Nov 3rd $160/$150 Put Vertical Spreads @ $1.10 Debit. DailyPlay Portfolio: By Closing all 3 Contracts, we will be paying $330. We initially opened these 3 Contracts on Sept 27 @  $3.73 Credit. Our average gain, therefore, is $263 per contract. 

Investment Rationale

With geopolitical tensions escalated over the weekend, we are entering today with oil prices significantly higher and equities indices lower. After a strong week last week, we will see if markets have the strength to continue higher, or rollover at these important resistance levels. Given the high degree of uncertainty and volatility expected around today’s open, we are only going to reduce exposure in our portfolio. Having collected over 70% of the max profit of our credit spread on CRWD, it is time to close out this trade at a gain and maintain the current holdings in our portfolio. This week’s CPI print and FOMC minutes will likely provide an important outlook for equities and bonds going into the November FOMC meeting. 

Closing Trade

• XOM – 60.70% Loss: Sell to Close 5 Contracts (or 100% of your Contracts) Nov 17th $115/$125 Call Vertical  Spreads @ $1.45 Credit. DailyPlay Portfolio: By Closing all 5 Contracts, we will receive $725. We initially opened these 5 Contracts on October 3 @ $3.69 Debit. Our average loss, therefore, is $224 per contract. 

Investment Rationale

As 10-year yields hover around the 4.7%, we continue to see a case for equities to grind lower with the Nasdaq-100 holding onto a last major support level. Our base case remains that while big tech has held up, it trades at valuations that are too high in this interest rate environment. We believe that there is downside risk in this sector and maintain short positions to potentially profit from a breakdown of this major support level. However, reviewing our positions, it is unfortunate that XOM has announced an acquisition that has sent the stock down significantly, and requires us to cut losses just a few days after entering the position. However, the discipline of cutting losers quickly and keeping our sights on managing winners is the recipe for profitability in the long run. For now, we must close out our full XOM position heading into the weekend. 

Investment Rationale

With yesterday’s bounce in equities lead by large cap tech, its easy to get sucked into the headlines and see this as a trading bottom. Let’s review where we stand on the charts. The S&P 500 remain below its key $4330 support level and maintains its bearish trend. While the QQQs have held its key $355 support level, but it needs to get above the $365 gap level for the current neutral trend to turn bullish. Our base case at the moment until these 2 resistance levels are broken is a neutral to bearish outlook, especially with 10-year yields @ 4.7%. As we review the DailyPlay portfolio, no positions are currently at a take profit or stop loss level, so we will not make any adjustments to the portfolio today. 

AAPL Bearish Opening Trade Signal

View AAPL Trade

Strategy Details

Strategy: Long Put Vertical Spread

Direction: Bearish

Details: Buy to Open 5 Contracts Dec 15th $170/$155 Put Vertical Spreads @ $3.94 Debit per contract.

Total Risk: This trade has a max risk of $1,970 (5 Contracts x $394) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $394 to select the # contracts for your portfolio.

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

1M/6M Trends: Bearish/ Mildly Bearish

Relative Strength: 7/10

OptionsPlay Score: 145

Stop Loss: @ $2.00 Credit (50% loss of premium paid).

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

With the S&P 500 firmly below the $4330 support level and 10-year yields now within spitting distance of 5%, the only market hanging on is the Nasdaq-100. I see risks building that the Nasdaq and big tech will break its support level at risk of a major pullback. We reduced our exposure last week on AAPL with the concern that markets were at a crossroads and could potentially rally in the short run. Those odds are reduced at this point and I’m advocating that we add bearish exposure in AAPL again to our portfolio. This time buying downside exposure in the form of a put spread into year end. Buy Dec $170/$155 Put Vertical @ $3.94 Debit. With a hypothetical portfolio of $100,000, I recommend risking 2% of the portfolio’s value to this trade, which is 5 Contracts for a risk of $1,970. We will set a stop loss on the put spread at around 50% of the premium paid @ $2.00 Credit.

AAPL – Daily

XOM Bullish Opening Trade Signal

View XOM Trade

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish

Details: Buy to Open 5 Contracts Nov 17th $115/$125 Call Vertical Spreads @ $3.69 Debit per contract.

Total Risk: This trade has a max risk of $1,845 (5 Contracts x $369) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $369 to select the # contracts for your portfolio.

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

1M/6M Trends: Neutral/Bullish

Technical Score: 8/10

OptionsPlay Score: 105

Stop Loss: @ $2.00 Credit (50% loss).

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

A recent pullback in oil prices has presented an opportunity to seek long exposure in energy stocks where the risk/reward ratio is more favorable. XOM currently is knocking on an all-time high triple top of $120 and the recent pullback to its 21D moving average of $155 provides an entry point to play for a potential breakout higher. With oil prices finding support around the $88 level, look for energy stocks to also find stabilization at these levels and potentially start trading higher if oil prices continue to spike. I’m looking to buy the Nov $115/$125 Call Vertical @ $3.69 Debit. With a hypothetical portfolio of $100,000, I recommend risking 2% of the portfolio’s value to this trade, which is 5 Contracts for a risk of $1,975. We will set a stop loss on the put spread at around 50% of the premium paid @ $2.00 Credit.

XOM – Daily