Closing Trade

• TXN – 75% Gain: Buy to Close 3 Contracts (or 100% of your Contracts) Oct 13th $170/$180 Call Vertical Spreads @ $1.00 Debit. DailyPlay Portfolio: By Closing all 3 Contracts, we will be paying $300. We initially opened these 3 Contracts on Sept 5 @ $3.95 Credit. Our average gain, therefore, is $295 per contract. 

Investment Rationale

All eyes are on the FOMC meeting today, as Chairman Powell is expected to deliver no rate hikes and an interpretation of the current inflation and employment data. One of the unexpected drivers of inflation is oil as it approaches $100/barrel. This will cause a rise in inflation and a dent in consumer spending as discretionary spend is allocated away from goods and services towards gas tanks. And companies will have to raise prices to pass on fuel costs to consumers as well. Note that the 10-year yields are now firmly at risk of rising towards the 5.2% level, not seen since 2007, which is concerning for current equity valuations. We are going to take this opportunity to close out half of our TXN trade, closing the 3 contracts of the Oct 13 $170/$180 Call Vertical @ $1.00 Debit since we have reached 75% of Max Gain and keep our 5 Contracts of a Put Spread to seek further downside in semiconductors. 

Closing Trade

• BIDU – 92.31% Loss: Buy to Close 3 Contracts (or 100% of your Contracts) Oct 13th $144/$134 Put Vertical Spreads @ $7.00 Debit. DailyPlay Portfolio: By Closing all 3 Contracts, we will be paying $2,100. We initially opened these 3 Contracts on Sept 1 @ $4.25 Credit. Our average loss, therefore, is $275 per contract. 

Investment Rationale

As a reminder, our DailyPlay service is designed to not only provide trade ideas and signals to enter and exit, but also provide a daily reminder of the best practices for managing a portfolio of positions. It is instinctual to hold onto losing positions, hoping that they will return back to profits, and take profits as soon as they appear. However, our goal at OptionsPlay is to help shape you into a profitable trader. And that can only be achieved by ensuring that losers stay small and give winners have the chance to run. For today, as we look at our portfolio, BIDU has reached a stop loss level and requires management. We are going to close out the full position of BIDU and focus on managing our winning positions. 

KEY Bullish Opening Trade Signal

View KEY Trade

Strategy Details

Strategy: Long Call

Direction: Bullish

Details: Buy to Open 16 Contracts Nov 17th $11 Calls @ $1.28 Debit per contract.t.

Total Risk: This trade has a max risk of $2,032 (16 Contracts x $127) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $127 to select the # shares for your portfolio.

Trend Continuation Signal: This stock is in a bullish trend and is expected to continue higher.

1M/6M Trends: Bullish/Mildly Bullish

Technical Score: 7/10

OptionsPlay Score: 77

Stop Loss: @ $0.65 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 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

All eyes are on the FOMC this week as the Fed is expected to keep rates at the current level. Investors will be focused on Chairman Powell’s language around the latest CPI and employment data, and how that factors into rate hikes for the rest of the year. Currently the market is expecting a 33% chance of a rate hike in November and traders are already betting on a faster than expected rate cuts for next year. Equity markets remained neutral as extreme bearishness in the markets have started to recede. What’s interesting is that small caps and value have started to outperform large cap growth, which factors into how we look for opportunties right now.

Financials has been on our radar for a couple weeks and recently started to show relative strength. Looking for smaller cap, regional banks we find KEY as an  way to play for upside in equities. KEY’s trends turned bullish last week and trades at a reasonable 8x forward earnings and a 7% dividend yield provides an attractive risk/reward entry for long exposure. With IV Rank @ 8%, I’m looking to simply buy the Nov $11 Call @ $1.27 Debit. With a hypothetical portfolio of $100,000, I recommend risking 2% of the portfolio’s value to this trade, which is 16 Contracts for a risk of $2,032. We will set a stop loss on the put spread at 50% of the premium paid @ $0.65 Credit.

KEY – Daily

Investment Rationale

Data out of China has started to stabilize as Industrial Output and Retail Sales both surprised to the upside. As we look at how markets are digesting the strength of the US economy alongside a potential stabilization across China, we see that the S&P 500 is currently rallying up to its key $4550 resistance level. A break above that would suggest the start of a new bullish trend, while a rejection at those levels targeting $4330 to the downside. Currently our DailyPlay portfolio is positioned net long with a couple of hedges against a downturn using technology stocks. I currently do not feel the need to add more exposure, preferring to wait and see how the market reacts to reaching those upside targets first. I hope that you have a wonderful weekend!

Closing Trade

• UPS – 65.29% Gain: Buy to Close 3 Contracts (or 100% of your Contracts) Oct 20th $165/$175 Call Vertical Spreads @ $1.18 Debit. DailyPlay Portfolio: By Closing all 3 Contracts, we will be paying $354. We initially opened these 3 Contracts on Sept 6 @ $3.64 Credit. Our average gain, therefore, is $246 per contract. 

Investment Rationale

As we wait on retail sales this morning to provide a glimpse into how consumer spending has held up into the end of summer, one position has reached its final target, UPS. This is our 3rd and final trade on UPS now that is has gapped lower and reached our downside target. If UPS were to rally back towards resistance we may enter another short in the next few weeks, but for now I think it’s time to take our profits on this trade and move onto other ideas. We’re going to close out the final remaining contracts on UPS.

TXN Bearish Opening Trade Signal

View TXN Trade

Strategy Details

Strategy: Long Put Vertical Spread

Direction: Bearish

Details: Buy to Open 5 Contracts Oct 20th $165/150 Put Vertical Spread @ $4.08 Debit per contract.

Total Risk: This trade has a max risk of $2,040 (5 Contracts x $408) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $408 to select the # shares for your portfolio.

Trend Continuation Signal: This stock is bearish and expected to break below support.r.

1M/6M Trends: Bearish/Bearish

Technical Score: 8/10

OptionsPlay Score: 126

Stop Loss: @ $2.04 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 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 housing data out of China continuing to erode, sentiment in the US equity markets are declining alongside. We are heading into today’s huge CPI print, with downside risk that inflation comes in hotter than expected. Oil and grains are examples where prices have surged in the past month and could contribute to an inflation uptick. Reviewing our DailyPlay portfolio, one position has recently confirmed our views, TXN has broken below its $165-170 trading range. I’m going to add to this position by taking the premiums that I’ve collected from the Call Vertical that we sold to buy some downside exposure. Buy Oct $165/$150 Put Vertical @ $4.08 Debit. With a hypothetical portfolio of $100,000, I recommend adding another 2% of the portfolio’s value to this trade, which is 5 Contracts for a risk of $2,040. We will set a stop loss on the put spread at 50% of the premium paid @ $2.04 Credit.

TXN – Daily

Closing Trade

• NFLX – 54.16% Loss: Sell to Close 2 Contracts (or 100% of your Contracts) Oct 20th $415/$360 Put Vertical Spreads @ $8.70 Credit. DailyPlay Portfolio: By Closing both Contracts, we will receive $1,740 We initially opened 1 Contract on Aug 16 @ 15.72 Debit, and then another Contract on Aug 18 @ $21.60 Debit. Our average loss, therefore, is $996 per contract. 

Investment Rationale

After 3 straight quarters of revenue declines for AAPL, today’s event marks a critical moment that investors have been looking forward to. With the launch the iPhone 15, Watch and iPad updates will likely be offset by any concerns of slowdown in consumer spending and further contagion risk with China. The event will not likely result in meaningful volatility unless there are surprise announcements with VisionPro or new products. Additionally, if we look at a chart of AAPL relative to its sector XLK, we see that it has already printed a new 52-week low a few days ago. This shows poor relative strength going into the event, signaling distribution of the stock ahead of it. We are going to keep our hedge on AAPL while our NFLX position has crossed the threshold for cutting losses and warrants closing out the full position after initially breaking below our $415 support level

INDA Bullish Opening Trade Signal

View INDA Trade

Strategy Details

Strategy: Long Call

Direction: Bullish

Details: Buy to Open 8 Contracts Oct 20th $43 Calls @ $2.42 Debit per contract.

Total Risk: This trade has a max risk of $1,936 (8 Contracts x $242) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $242 to select the # shares for your portfolio.

Trend Continuation Signal: This stock is in a bullish trend and recently broke higher.

1M/6M Trends: Bullish/Bullish

Technical Score: 9/10

OptionsPlay Score: 81

Stop Loss: @ $1.20 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 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

As the G-20 Summit in India is wrapping up, geopolitical risks continue to rise and manufacturing capacity has seen a substantial shift towards India. Seen as more stable, friendlier to Western nations and a population growth that supports economic growth, India has seen a substantial inflow of capital investment. Our bullish India trade (INDA) has now broken out above a key resistance level of $44.75 and has room to rally to its $49 recent highs. Since our investment thesis has been proved correct with this breakout, it is now an opportunity to add some more exposure to this trade. I’m going to purchase more contracts of the Oct $43 Calls @ $2.42 Debit. With a hypothetical portfolio of $100,000, I recommend adding another 2% of the portfolio’s value to this trade, which is 8 Contracts for a risk of $1,936. We will move our stop higher on the spread at 50% of the premium of the 8 new contracts @ $1.20 Credit.

INDA – Daily

AAPL Bearish Opening Trade Signal

View AAPL Trade

Strategy Details

Strategy: Long Put Vertical Spread

Direction: Bearish

Details: Buy to Open 3 Contracts Nov 17th $180/160 Put Vertical Spread @ $5.91 Debit per contract.

Total Risk: This trade has a max risk of $1,773 (3 Contracts x $591) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $591 to select the # shares for your portfolio.

Trend Continuation Signal: This stock is bearish and expected to break to lower levels.

1M/6M Trends: Bearish/Neutral

Technical Score: 9/10

OptionsPlay Score: 144

Stop Loss: @ $2.95 Credit (100% 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 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

Investment sentiment has continued to sour this week as China’s ban of iPhones for government employees threatens the largest company in the world. China accounts for over 20% of all revenue Apple (AAPL) generates and concerns over retail customers shunning Apple products as well is not yet fully baked into the valuation. Apple currently represents one of the most expensive large cap tech companies at 27x forward earnings while expecting only 9% EPS growth next year. This growth expectation also does not factor into any slowdown in demand globally, or the potential downside risks that China now represents. Since implied volatility has expanded meaningfully over the past 2 days, it’s best to trade a spread to mitigate further downside risks by buying the Nov $180/160 Put Vertical @ $5.91 Debit. With a hypothetical portfolio of $100,000, I recommend risking 2% of the portfolio’s value on this trade, which is 3 Contracts for a risk of $1,773. We will set a stop loss on the spread at 50% of the premium paid @ $2.95 Credit.

AAPL – Daily

Closing Trade

• JETS – 50.55% Loss: Sell to Close 26 Contracts (or 100% of your Contracts) Oct 20th $19 Calls @ $0.45 Credit. DailyPlay Portfolio: By Closing all 26 Contracts, we will receive $1,170 We initially opened this trade @ $0.91 Debit per contract. Our average loss, therefore, is $46 per contract. 

Investment Rationale

As the market digested the ISM numbers that suggested the inflation fight still has ways to go, investors had to shift expectations of Fed policy for the next FOMC meeting. The probability of another rate hike has elevated and the prospective of keeping rates higher for longer is now more likely. These sudden shifts in investor sentiment is certainly challenging to navigate and further require closing out trades that are not working quickly and focus on adding exposure to trade that are. The adjustment we are going to make to our portfolio today is closing out the JETS position which has reached the 50% stop loss level.