SBUX Bearish Opening Trade Signal

View SBUX Trade

Strategy Details

Strategy: Long Put

Direction: Bearish

Details: Buy to Open 4 Contracts Aug 25th $100 Puts @ $5.60 Debit per contract.

Total Risk: This trade has a max risk of $2,240 (4 Contracts x $560) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $560 to select the # shares for your portfolio.

Trend Continuation Signal: This stock is in a bearish trend and further downside is expected as it broke below a key support level.

1M/6M Trends: Bearish/Bearish

Technical Score: 3/10

OptionsPlay Score: 94

Stop Loss: @ $3.00 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 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

I hope that many of you reading this were able to attend my session last night on How to Grow a Trading Account (click on the image above to open the recording), or are able to watch the recording today. We are going to adjust our SBUX trade exactly as we had laid out in the session last night as to how we grow our DailyPlay portfolio in the long run. As SBUX breaks below a key support level and starts to show that our outlook is correct, we are taking this opportunity to add to this position instead of taking profits. You may be included to take some profit here, but that is no way to grow an account, we would rather risk this small win back into a loser if it means we have the chance to hit a home run. It’s uncomfortable and painful to potentially see a win turn back into a loss when you had a chance to take profits, but that’s a counterintuitive requirement of profitable trading. We are going to purchase another 2% of our account on more SBUX puts. Buy 4 Contracts Aug $100 Puts @ $5.60 Debit. However, we are also going to move our stops from the original $2.00 up to $3.00. This would risk a total of $1,200 on the entire 10 contracts if we end up being stopped out with unlimited downside exposure on double our initial trade size. 

SBUX – Daily

NEM Bearish Opening Trade Signal

View NEM Trade

Strategy Details

Strategy: Short Call Vertical Spread

Direction: Bearish

Details: Sell to Open 12 Contracts Aug 18th $42.50/$45 Calls @ $0.93 Credit per contract.

Total Risk: This trade has a max risk of $1,896 (12 Contracts x $158) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $158 to select the # shares for your portfolio.

Trend Continuation Signal: This stock is in a bearish trend and further downside is expected.

1M/6M Trends: Bearish/Bearish

Technical Score: 2/10

OptionsPlay Score: 98

Stop Loss: @ $1.86 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 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 equities continue to trade sideways on higher interest rate expectations, we turn our attention to Gold. The precious metal has continued to trade below its $1940 support level towards its $1866 support, and we see further downside. It also happens that NEM recently triggered both our sell signal on our Trade Ideas yesterday as well as an optimal bearish credit spread last night. With its recent rejection at its $43 resistance level and NEM’s underperformance relative to the gold miners I see an opportunity to add some short exposure in an asset class that is less correlated to equities. Look to sell the Aug $42.5/45 Call Vertical @ $0.92 Credit. 

NEM – Daily

Investment Rationale

With equities opening up lower on the back of weak industrial data out of China and a light week of volume, we are taking a pause from adding any additional positions in our DailyPlay portfolio. At the moment the $444 resistance level on SPY is holding alongside the major resistance levels are the ones we are paying attention to this week. A close below those levels suggests the rally momentum is waning and starting to show signs of exhaustion. 

SPY – Daily

Closing Trade

• AAPL – 107.74% Loss: Buy to Close 6 Contracts (or 100% of your Contracts) July 28th $190/$195 Call Vertical Spreads @ $3.22 Debit. DailyPlay Portfolio: By Closing all 6 Contracts, we will pay $1,932. 

JPM Bullish Opening Trade Signal

View JPM Trade

Strategy Details

Strategy: Long Call

Direction: Bullish

Details: Buy to Open 3 Contracts July 21st $140 Calls @ $5.98 Debit per contract.

Total Risk: This trade has a max risk of $1,794 (3 Contracts x $598) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $598 to select the # shares for your portfolio.

Trend Continuation Signal: This stock is in a bullish trend and further upside is expected.

1M/6M Trends: Bullish/Bullish

Technical Score: 7/10

OptionsPlay Score: 99

Stop Loss: @ $2.99 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 US equities powers higher and even broadens a bit, there is a risk-on sentiment, despite a dislocation with underlying fundamentals and economic numbers. One of our long holdings JPM has started to breakout above its recent trading range high of $144. We are taking this opportunity to add to our position for further upside and raising our stops on all contracts to the original breakeven price of $4.30. Adding 3 contracts of the July $140 Calls @ $5.98 Debit. By raising our stops an adding to a position we would risk a total of only roughly $500 for unlimited upside with a position size that is roughly 4% of our total portfolio value. 

We also need to close AAPL from our portfolio as it marches past the $3 Trillion mark and losses exceed 100% of the premium collected. 

Closing Trade

• ORCL – 59.25% Loss: Sell to Close 8 Contracts (or 100% of your Contracts) July 7th $111/$120 Call Vertical Spreads @ $1.96 Credit. DailyPlay Portfolio: By Closing all 8 Contracts, we will receive $1,568. We opened this trade @ $2.70 Debit and, resulting in an average cost of $270 per contract. The average loss per contract is therefore $141.50.

AXP Bullish Opening Trade Signal

View AXP Trade

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish

Details: Buy to Open 4 Contracts August 18th $170/$185 Call Vertical Spreads @ $5.05 Debit per contract. per contract.

Total Risk: This trade has a max risk of $2,016 (4 Contracts x $504) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $504 to select the # shares for your portfolio.

Trend Continuation Signal: This stock is in a bullish trend and is expected to continue higher over the duration of this trade.

1M/6M Trends: Bullish/Bullish

Technical Score: 8/10

OptionsPlay Score: 109

Stop Loss: @ $2.52 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

As consumers pull back with spending, they have become more selective, but travel remains one area where spending continues to rise. At the heart of this spending are with airlines and the credit card providers that benefit from this spend. American Express’s premium credit cards are the preferred card of travelers with the their Delta partnership driving nearly 1% of the US’s GDP in spending alone. AXP recently pulled back to its $165 breakout level and now provides an opportunity to buy on a pullback to an important support level. I’m looking to purchase the Aug $170/185 Call Vertical @ $5.04 Debit to play for a breakout higher. We also have been monitoring our ORCL position and it is now at risk of filling the earnings gap, so we are closing out our adjusted trade at a loss of $1,425, bringing the net gain on ORCL trade to $4,015 on the net position. 

AXP – Daily

Closing Trade

• WBA – 85.30% Loss: Sell to Close 17 Contracts (or 100% of your Contracts) July 21st $30/$35 Call Vertical Spreads @ $0.28 Credit. DailyPlay Portfolio: By Closing all 17 Contracts, we will receive $476. We opened 12 Contracts of his trade @ $1.58 Debit and another 7 Contracts @ $2.79 Debit, resulting in an average cost of $266.41 per contract. The average loss per contract is therefore $238.41.

HLT Bullish Opening Trade Signal

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Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish

Details: Buy to Open 6 Contracts August 18th $145/$160 Call Vertical Spreads @ $3.37 Debit 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 # shares for your portfolio.

Trend Continuation Signal: This stock has been neutral and is expected to trade higher over the duration of this trade.

1M/6M Trends: Neutral/Neutral

Technical Score: 7/10

OptionsPlay Score: 92

Stop Loss: @ $1.69 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

Our bullish trade idea today is Hilton Worldwide Holdings ($HLT). $HLT has experienced a bullish trend which started in July 2022. However, over the last few months price has started to squeeze with higher lows and lower highs being formed. With the longer-term trend being bullish, a squeeze could indicate a potential breakout higher is on the cards in the near future. Therefore, the trade structure we will be using is buying a slightly OTM call vertical to take advantage of a strong bullish move. The August 18 $145/$160 only costs $3.37 (22% of the vertical width) which provides an excellent risk/reward long opportunity. The next key resistance levels are at $150 and $160 respectively which will also act as price targets for $HLT.

Partial Closing Trade

• QQQ – 66.29% Gain: Sell to Close 2 Contracts (or 2/3 of your Contracts) July 3rd $365 Puts @ $7.35 Credit. DailyPlay Portfolio: By Closing 2 of the 3 Contracts, we will receive $1,470.

Investment Rationale

Yesterday we saw a sizable shift in the bond market’s expectations of Fed policy for the rest of 2023. Bond swaps are now only pricing in 1 rate cut for the rest of 2023, shifting from the 2 cuts expected last week. Despite this there remains a large gap between the bond markets and what the Fed has continued to communicate with 2 more rate hikes expected this year. The 1.4% decline in the Nasdaq-100 yesterday reflects this change in sentiment as tech leads the selloff and the Equal Weight S&P 500 gains nearly 0.6%. This improves the market breadth marginally but remains challenging for equities overall. We are taking this opportunity to take partial profits on our QQQ portfolio hedge, and close 2 out of 3 contracts. We are also watching our ORCL position closely as it is around our 50% stop loss threshold and may close during this week’s trading session.

QQQ – Daily

KRE Bearish Opening Trade Signal

View KRE Trade

Strategy Details

Strategy: Short Call Vertical Spread

Direction: Bearish

Details: Sell to Open 8 Contracts Aug 18th $40/$44 Calls @ $1.51 Credit per contract.

Total Risk: This trade has a max risk of $1,992 (8 Contracts x $249) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $249 to select the # shares for your portfolio.

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

1M/6M Trends: Bearish/Bearish

Technical Score: 2/10

OptionsPlay Score: 104

Stop Loss: @ $3.02 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 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

Our bearish trade idea today is the Regional Banks ETF (KRE). KRE has underperformed relative to the Financial sector (XLF) due to concerns that smaller banks may be more vulnerable to the stress tests from the Fed, especially after the banking turmoil earlier this year. We have seen price action turn bearish after a small recovery and this provides an excellent opportunity to sell a call credit spread that collects roughly 37% of the vertical width. Our downside target will be the $34 – $35 area which also acted as the previous swing low. Therefore, we will be selling the August 18 $40/$44 call spread collecting $1.51 to gain neutral/bearish exposure on KRE. 

Closing Trade

• BA – 62.62% Loss: Sell to Close 3 Contracts (or 100% of your Contracts) Aug 18th $225/$250 Call Vertical Spreads @ $2.68 Credit. DailyPlay Portfolio: By Closing all 3 Contracts, we will receive $804. We opened this trade at $7.42 Debit, resulting in a cost of $742 per contract. The average loss per contract is therefore $474.

SBUX Bearish Opening Trade Signal

View SBUX Trade

Strategy Details

Strategy: Long Put

Direction: Bearish

Details: Buy to Open 6 Contracts Aug 18th $100 Puts @ $3.20 Debit per contract.

Total Risk: This trade has a max risk of $1,920 (6 Contracts x $320) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $320 to select the # shares for your portfolio.

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

1M/6M Trends: Neutral/Mildly Bearish

Technical Score: 5/10

OptionsPlay Score: 85

Stop Loss: @ $1.60 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

Despite the Nasdaq-100 continuing to shrug off the risk of higher interest rates, the rest of the market has weakened considerably over the past 2 trading sessions. Market breadth has declined with more than 50% of all stocks trading below their 200D SMA as of yesterday. With this erosion, we are looking to add short exposure to our DailyPlay portfolio while cutting long exposure in BA. After breaking down below its $104 support level, SBUX has rallied over the past few weeks and presents an opportunity with favorable risk/reward to add some short exposure. Currently trading at over 29x forward earnings, SBUX is priced for strong EPS growth, but as consumers become more selective in their spending, there are downside risks to these high expectations. With IV Rank at 0%, I am seeking downside exposure using a simple Aug $100 Put @ $3.20 Debit, risking only 3.2% of the stock’s value for unlimited downside exposure. Additionally, BA has failed to sustain its breakout and reached a stop loss level and it is time to cut losses by closing out the entire position. 

SBUX – Daily

As a reminder, the goal of our DailyPlay signals is to show you how to manage your portfolio for profitability. During choppy markets, it is most important to cut your losers very quickly but remain confident in opening new positions and opportunities. This is why we have been aggressively cutting losses these past few days and focusing on adjusting winning positions to offset our losses. 

Closing Trade

• GOOGL – 62.09% Loss: Sell to Close 5 Contracts (or 100% of your Contracts) July 21st $125/$135 Call Vertical Spreads @ $1.49 Credit. DailyPlay Portfolio: By Closing all 5 Contracts, we will receive $745. By Closing all 5 Contracts, we will receive $745. We opened this trade at $3.93 Debit, resulting in a cost of $393 per contract. The average loss per contract is therefore $244.

Investment Rationale

Chairman Powell’s testimony did spook certain sectors of the markets with tech leading the move lower by nearly 1.5%. We will maintain our short-dated hedge with QQQ going into the end of this week and see how markets digest today’s testimony. With the VIX touching a new post-COVID low, my hunch is that markets will continue to shake this off and see a slow grind higher. Despite that, our adjustment trade on GOOGL has reached its stop loss level and it’s time to cut our losses. We’re closing out the remaining open contracts on GOOGL.