EEM Bullish Opening Trade Signal

View EEM Trade

Strategy Details

Strategy: Long Call

Direction: Bullish

Details: Buy to Open 12 Contracts Nov 17th $41 Calls @ $1.68 Debit per contract.

Total Risk: This trade has a max risk of $2,028 (12 Contracts x $169) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $169 to select the # shares for your portfolio.

Trend Continuation Signal: This stock has been neutral to bearish and is expected to break downwards. 

1M/6M Trends: Neutral/Bullish

Technical Score: 6/10

OptionsPlay Score: 81

Stop Loss: @ $0.84 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

Read this week’s Macro Weekly Research to start your trading week. 

With the biggest week of earnings season behind us, we’ve closed many of our earnings plays and currently have only a few open positions. As we start to wrap up earnings season I’d like to add some longer-term exposure in our portfolio based on emerging trends in the market. One that recently caught my eye is Emerging Markets. Emerging Markets is one of the “risk-on” area that could benefit from an improving global economic outlook. EEM recently broke out from a 2 year bearish trendline and presents a strong bullish risk/reward. I’m looking out to Nov and purchasing the $41 Calls @ $1.69 Debit. With a hypothetical portfolio of $100,000 we recommend risking 2% of it on this trade, which is 12 Contracts for a total risk of $2,028. Set a stop loss on the call when losses exceed 50% of the premium paid, at about $0.85 Credit.

EEM – Daily

UPS Bearish Opening Trade Signal

View UPS Trade

Strategy Details

Strategy: Long Put Vertical Spread

Direction: Bearish

Details: Buy to Open 4 Contracts Sept 15th $180/$165 Put Vertical Spreads @ $4.51 Debit per contract.

Total Risk: This trade has a max risk of $1,800 (4 Contracts x $450) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $450 to select the # shares for your portfolio.

Trend Continuation Signal: This stock is neutral to bearish and is expected to continue lower.

1M/6M Trends: Neutral/Bearish

Technical Score: 5/10

OptionsPlay Score: 119

Stop Loss: @ $2.25 Debit (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 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

AAPL and AMZN earnings yesterday showed that consumers remained resilient but showed signs of deceleration. One stock that is sensitive to lower shipping volumes and higher fuel costs is UPS. Reporting earnings next week, UPS is currently trading within a range, but the relative performance to its sector XLI is poor and new 52w lows, suggesting possible weakness going into earnings. With a union deal last week, UPS avoids a strike but adds substantial wage costs and will likely further erode margins. Couple the negative EPS and revenue growth with lower margins, UPS earnings is at risk of coming in on the lighter end. With this, I see an opportunity to seek bearish exposure going into earnings next week I’m looking to buy the Sept $180/165 Put Vertical @ $4.50 Debit. With a hypothetical portfolio of $100,000 we recommend risking 2% of it on this trade, which is 4 Contracts for a total risk of $1,800. Set a stop loss on the spread when losses exceed 50% of the premium paid, at about $2.25 Credit.

UPS – Daily

Trading earnings comes with binary risks and PYPL is a trade that simply did not work out as expected. In such cases, it is important to cut losses immediately and salvage any premiums possible for the next opportunity. PYPL released earnings in line with expectations but investors were not impressed with it and the stock is down nearly 7% pre-market. We will update the pricing for closing the full position after today’s open. For today, all eyes are focused on AAPL and AMZN earnings this afternoon which will likely set the tone for tech stocks and its AI lead rally for the rest of the earnings season. Additionally, markets seem to have shrugged off any concerns of systemic risk from Fitch’s downgrade yesterday so we will monitor the situation closely this week and refrain from adding any new positions today. 

Closing Trades

• CAT – 138.20% Gain: Sell to Close 3 Contracts (or 100% of your Contracts) Sept 15th $260/$280 Call Vertical Spreads  @ $16.15 Credit. DailyPlay Portfolio: We opened this trade at $ 6.78 Debit, giving us a gain of $937 per contract.
• AMD – 30.33% Loss: Sell to Close 5 Contracts (or 100% of your Contracts) Aug 25th $110 Puts @ $3.33 Credit. DailyPlay Portfolio: We opened this trade at $ 4.78 Debit, giving us a loss of $145 per contract.

PYPL Bullish Opening Trade Signal

View PYPL Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 7 Contracts Sept 25th $75/$70 Put Vertical Spreads @ $2.01 Credit per contract.

Total Risk: This trade has a max risk of $2,093 (7 Contracts x $299) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $299 to select the # shares for your portfolio.

Trend Continuation Signal: This stock is bullish and is expected to break out above a trendline.

1M/6M Trends: Bullish/Bullish

Technical Score: 5/10

OptionsPlay Score: 94

Stop Loss: @ $4.02 Debit (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 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

Going into today’s session, we have 2 open positions that need managing, CAT and AMD. CAT reported stronger than expected earnings and rallied above the $280 short strike on our vertical, an opportunity to take profits. By closing out the 3 Contracts of our Sept $260/280 Call Vertical @ $16.15 Credit we realized a 138% gain or $2,800 in profits. We also need to close out all contracts of our AMD trade as it reported better than expected earnings. We will update the pricing after the open.

Looking towards this evening’s earnings, PYPL stands out as an opportunity to take bullish exposure. After declining 75% over the past two years, PYPL is now trading at an attractive 14x forward earnings despite expecting 20% and 15% EPS growth for this year and next year. Additionally, the chart has finally started to breakout from a bearish trendline over the past year. With IV Rank currently at 51% we see an opportunity to Sell to Open the Sept $75/70 Put Vertical @ $2.01 Credit (40% of width). With a hypothetical portfolio of $100,000 we recommend risking 2% of it on this trade, which is 7 Contracts for a total risk of $2,093. Set a stop loss on the spread when losses exceed 100% of the premium collected, at about $4.00 Debit.

PYPL – Daily

Closing Trade

• TMUS – 43.53% Loss: Sell to Close 7 Contracts (or 100% of your Contracts) August 18th $140/$150 Call Vertical Spreads @ $5.48 Credit. And, Sell to Close 4 Contracts (or 100% of your Contracts) Sept 15th $140/$155 Call Vertical Spreads @ $5.48 Credit. DailyPlay Portfolio: With an average cost basis of $9.71 Debit, our loss on this trade is, therefore an average of $423 per contract.

Investment Rationale

With more than 50% of S&P 500 companies reported earnings so far, 80% have beat on EPS while only 64% on Revenue. Stocks that beat on earnings moved on average of 0.2% lower after the report while stocks that missed move on average of 0.7% lower. As we continue to monitor for opportunities during earnings season, we must review our portfolio and cut any underperforming trades. TMUS was one that we added further exposure to after breaking out above its $140 resistance level, but has since traded back into the range. It has now triggered our stops loss levels that we have set and it’s time to cut this loss. While this may hurt to see a winning trade turn back into a loss, we have to remember that it’s more important to stick with our trading plan. Cutting losses quickly and adding to winning positions provides us with the opportunity to hit home runs and remain profitable in our portfolios. What is far worse for your portfolio’s long-term performance is taking a small profit because you didn’t follow your own trading plan. I’m looking to close both the 7 Contracts of Aug $140/$150 Call Vertical @ $1.44 Credit and the 4 Contracts of Sept $140/155 Call Vertical. We will also keep an eye on CAT after it reports with potential adjustments to that trade after the open. 

AMD Bearish Opening Trade Signal

View AMD Trade

Strategy Details

Strategy: Long Put

Direction: Bearish

Details: Buy to Open 5 Contracts Aug 25th $110 Puts @ $4.85 Debit per contract.

Total Risk: This trade has a max risk of $2,425 (5 Contracts x $485) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $485 to select the # shares for your portfolio.

Trend Continuation Signal: This stock has been neutral to bearish and is expected to break downwards. 

1M/6M Trends: Bearish/Neutral

Technical Score: 10/10

OptionsPlay Score: 94

Stop Loss: @ $2.40 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

Heading into the biggest week of earnings and AAPL on Thursday we kick off the week with some big tech earnings. One name I have my eye on is AMD. After INTC reported decent earnings last week, it was clear that consumer and server chips demand has remained soft. Any AI-driven optimism pales in comparison to NVDA and will likely result in negligible revenue increases. And if we look at a Chart of AMD, it has held its triangle formation, but its relative strength to its sector remains poor, suggesting a breakdown is more likely with earnings as the catalyst. This morning’s pre-market strength is an opportunity to seek bearish exposure as the risk of a disappointing earnings with weak guidance is elevated. I’m buying an Aug 25 $110 Put @ $4.85 Debit (will be cheaper at the open). With a hypothetical portfolio of $100,000 we recommend risking 2% of it on this trade, which is 5 Contracts for a total risk of $2,425. Set a stop loss on the spread when losses exceed 50% of the premium paid, at about $2.40 Credit.

AMD – Daily

Closing Trade

WHR – 31.36% Gain: Sell to Close 4 Contracts (or 100% of your Contracts) Aug 11th $149 Puts @ $7.75 Credit. DailyPlay Portfolio: By Closing all 4 Contracts, we will receive $3,100.

WHR Bearish Opening Trade Signal

View WHR Trade

Strategy Details

Strategy: Long Put Vertical Spread

Direction: Bearish

Details: Buy to Open 3 Contracts Sept 15th $145/$130 Put Vertical Spreads @ $5.85 Debit per contract.

Total Risk: This trade has a max risk of $1,755 (3 Contracts x $585) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $585 to select the # shares for your portfolio.

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

1M/6M Trends: Bearish/Neutral

Technical Score: 4/10

OptionsPlay Score: 111

Stop Loss: @ $2.93 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 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

Reviewing our open positions we see that WHR has continued to trend lower after reporting earnings and its 1m/6m trend have started to turn bearish. Now is a good time to adjust this position and roll the position to a Put Vertical spread and potentially profit from further downside. This locks in a profit on this trade and allows us to seek further downside exposure while risking a very small dollar amount. Sell to Close all 4 Contracts of the Aug $149 Puts @ $7.75 Credit and taking the proceeds to Buy the Sept $145/$130 Put Vertical @ $5.85 Debit. With a hypothetical portfolio of $100,000 we recommend risking 2% of it on this trade, which is 3 Contracts for a total risk of $1,755. Set a stop loss on the spread when losses exceed 50% of the premium paid, at about $2.90 Credit. With this roll, even if the put spread is stopped out, we will risk a total of roughly $140, with a potential profit of about $2,700 if WHR is below $130 at the Sept expiration. 

WHR – Daily

CAT Bullish Opening Trade Signal

View CAT Trade

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish

Details: Buy to Open 3 Contracts Sept 15th $260/$280 Call Vertical Spreads @ $7.07 Debit per contract.

Total Risk: This trade has a max risk of $2,121 (3 Contracts x $707) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $707 to select the # shares for your portfolio.

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

1M/6M Trends: Bullish/Bullish

Technical Score: 6/10

OptionsPlay Score: 102

Stop Loss: @ $3.54 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 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

Yesterday’s FOMC meeting was a non-event, despite Chairman Powell leaving the door open to further rate hikes. The market has now fully committed to pricing in no more rate hikes for the rest of the year and expect rates to be a full 125bps lower by the end of next year. This should be interpreted as positive, however markets are showing some early signs of exhaustion with negative divergence with momentum on both the S&P 500 and Nasdaq 100 index. Despite this, we see a healthy amount of rotation within the sectors and the rally broadening out. One sector that is showing strength on both an absolute and relative basis is industrials as it prints a new all time high yesterday. And CAT is a potential candidate for a breakout with earnings next week within the industrials sector. Trading at only 14x forward earnings, yet expecting 26% EPS growth this year, it’s trading at a valuation that could support a breakout on strong earnings guidance. Currently trading at just below the $265 resistance level we are taking this opportunity to buy an OTM Call Vertical to play for a breakout on earnings. Buy to Open Sept $260/280 Call Vertical @ $7.07 Debit. With a hypothetical portfolio of $100,000 we recommend risking 2% of it on this trade, which is 3 Contracts for a total risk of $2,121. Set a stop loss on the spread when losses exceed 50% of the premium paid, at about $3.50 Credit.

CAT – Daily

Today is the big day of the FOMC meeting, which will bring an expected 25bps hike. The big unknown is whether or not the Fed will pivot to a pausing after this rate hike. This is where I believe there is room for disappointment based on the strength of economic data, providing room for further rate hikes. We have to take this into account with our long positions that are at risk with this FOMC meeting. Taking a look at our positions, GOOGL turned out to be a winner almost instantly on the back of strong search revenue. We expect to close out this position after the open and will update the price after the open. We will also keep a close eye on WHR to close this out at a small loss despite seeing a big move lower yesterday. 

GOOGL Bullish Opening Trade Signal

View GOOGL Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 5 Contracts Sept 1st $121/$114 Put Vertical Spreads @ $3.05 Credit per contract.

Total Risk: This trade has a max risk of $1,975 (5 Contracts x $395) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $395 to select the # shares for your portfolio.

Trend Continuation Signal: This is a bullish trade on a stock that has been neutral to bullish and is expected to continue higher.

1M/6M Trends: Neutral/Neutral

Technical Score: 9/10

OptionsPlay Score: 105

Stop Loss: @ $6.10 Debit (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 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 we wait for HLT to report Wednesday morning and TMUS on Thursday afternoon, we look for opportunities among the Tech giants that report this week. Across the board, all the major tech names that lead this AI rally are trading at nosebleed valuations, except Alphabet. While still expecting over 16% EPS growth this year, GOOGL trades at only 22x next year’s earnings, presenting a long entry opportunity just before earnings. The risks lie in search revenue and communication of timelines for their AI integrations that could drive the stock performance after earnings. With options premiums elevated, we have a rare opportunity to sell a Bull Put Spread going into earnings collecting over 43% of the vertical width. Sell to Open the Sept 1 $121/$114 Put Vertical @ $3.05 Credit. With a hypothetical portfolio of $100,000 we recommend risking 2% of it on this trade, which is 5 Contracts for a total risk of $1,975 in. Set a stop loss on the spread when losses exceed 100% of the premium paid, about $6.10 Debit. 

GOOGL – Daily