DailyPlay Portfolio Review

Investment Rationale

As we resume trading after a shortened week, let’s review our current positions that we hold. 

Our Trades

AXP – 39 DTE

Bullish Debit Spread – The last week added gains to AXP as it bounced higher from support at $230. This uptrend will likely resume this week, after the previous short trading week.

AZN – 39 DTE

Bullish Credit Spread – Recent bounce brings the stock just above our short strike and look for time decay to start showing profits on this position. 

DHI – 39DTE

Bearish Debit Spread – The breakdown below the key $140 support level targets our $125 downside targets.

MS – 25 DTE

Bullish Credit Spread – MS is currently at a critical resistance at $100. We will keep a close eye on this trade to see how price reacts.

PYPL – 25 DTE

Bullish Credit Spread – PYPL continued its bounced higher over the last few trading days and a move above $61 will likely lead to further upside.

Closing Trade

• RACE – 52.16% loss: Sell to Close 4 Contracts (or 100% of your Contracts) July 19th $420/$390 Put Vertical Spreads @ $5.55 Credit. DailyPlay Portfolio: By Closing all 4 Contracts, we will receive $2,200. We opened 2 Contracts on May 21 @ $9.95 Debit and then another 2 Contracts on May 29 @ $13.35 Debit. The average loss, therefore, is $610. 

DailyPlay Portfolio Review

Investment Rationale

With Non-Farm payrolls due today and a thin day of trading, we will simply monitor how the markets respond to the jobs report. The only position that requires managing is RACE, as it triggers a 50% stop loss level. We’re going to close that trade today and provide a review of all the DailyPlay positions.

Our Trades

AXP – 42 DTE

Bullish Debit Spread – The last week added gains to AXP as it bounced higher from support at $230. The next upside target is at $240.

AZN – 42 DTE

Bullish Credit Spread – AZN continued to pull back from recent highs and we expect to see a bounce from support at $75 to warrant keeping this position open.

DHI – 42 DTE

Bearish Debit Spread – Had a confirmed break below a key area of support at $140. With this level holding as resistance our next downside target is $130.

MS – 28 DTE

Bullish Credit Spread – MS has been trading higher this week, with price at a critical resistance at $100. We will keep a close eye on this trade to see how price reacts.

PYPL – 28 DTE

Bullish Credit Spread – The lat two days added gains to PYPL as it bounced higher off support at $58. We will keep a close eye on this position as we need a break above $61 over the next few trading days to confirm momentum.

Additional AXP Bullish Opening Trade Signal

Investment Rationale

As we head into the July 4th holiday, we expect Friday to be a light trading day, despite Non-Farm payrolls coming out at 8:30AM. Our AXP position is progressing well towards our $240 target and we can add another 2% (roughly 2.5% today) of our portfolio’s exposure to this position and attempt to hit a home run with this trade. We will update you with any potential closing trades on Friday but will not be opening any new positions.

We are adding another 2% exposure to the AXP trade and therefore opening 2 more Contracts using the same strike prices and expiry date as on June 18.

AXP – Daily

Trade Details

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish Debit Spread

Details: Buy to Open 2 Contracts August 16th $220/$240 Call Verticals @ $12.58 Debit per Contract.

Total Risk: This trade has a max risk of $2,516 (2 Contracts x $1,258) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $1,258 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bullish trade on a stock that is bouncing higher off support.

1M/6M Trends: Bullish/Bullish

Relative Strength: 9/10

OptionsPlay Score: 90

Stop Loss: @ $6.29 Credit (50% loss of premium)

View AXP Trade

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. 

View AXP Trade

Closing Trade

• LIN – 58.82% gain: Buy to Close 2 Contracts (or 100% of your Contracts) July 19th $435/$450 Call Vertical Spreads @ $2.80 Debit. DailyPlay Portfolio: By Closing both Contracts, we will pay $560. We opened these 2 Contracts on June 14 @ $6.80 Credit. The gain, therefore, is $800. This translates to a gain of 0.8% on our Portfolio.

Additional DHI Bearish Opening Trade Signal

Investment Rationale

As home builders continue to underperform, home builders such as D.R. Horton continue to be under pressure and DHI just broke below the key $140 support level that we were expecting. We are going to take this opportunity to add another 2% of our portfolio’s exposure to this position as we target $125 to the downside. Additionally, LIN reached out $425 target price intraday yesterday and has triggered our take profit level, so we are going to take this opportunity to close that out for a profit. 

We are adding another 2% exposure to the DHI trade and therefore opening 5 more Contracts using the same strike prices and expiry date as on June 25.

DHI – Daily

Trade Details

Strategy Details

Strategy: Long Put Vertical Spread

Direction: Bearish Debit Spread

Details: Buy to Open 5 Contracts August 16th $140/$130 Put Vertical Spreads @ $4.30 Debit per Contract.

Total Risk: This trade has a max risk of $2,150 (5 Contracts x $430) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $430 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bearish trade on a stock that broke below an area of support.

1M/6M Trends: Bearish/Bearish

Relative Strength: 3/10

OptionsPlay Score: 112

Stop Loss: @ $2.15 Credit. (50% loss of premium)

View DHI Trade

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. 

View DHI Trade

AZN Bullish Opening Trade Signal

Investment Rationale

Having come off some positive news in their oncology and vaccine pipeline recently, AZN’s recent outperformance is worth paying attention too, especially as the technicals and fundamentals align for further potential upside.

Technical Analysis

AZN broke out from its $70 range back in April and has continued higher with strong momentum. The recent pullback to its $78 support level provides an attractive risk/reward for adding bullish exposure and seeking further upside. 

AZN – Daily

Fundamental Analysis

With expected EPS and revenue growth that is slightly higher than the average S&P 500 stock and strong margins, AZN trades at 10% discount to the average S&P 500 stock. This reflects at least a 10-15% upside in the valuation of AZN if we look at the fundamentals. With a robust drug pipeline there favorable upside potential for AZN. 

Trade Details

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish Credit Spread

Details: Sell to Open 13 Contracts August 16th $77.5/75 Put Vertical Spreads @ $0.94 Credit per Contract.

Total Risk: This trade has a max risk of $2,028 (13 Contracts x $156) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $156 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bullish trade on a stock that is trading higher and is expected to continue the uptrend.

1M/6M Trends: Mildly Bearish /Bullish

Relative Strength: 9/10

OptionsPlay Score: 95

Stop Loss: @ $1.88 Debit. (100% loss to the value of premium received)

View AZN Trade

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. 

View AZN Trade

DailyPlay Portfolio Review

Investment Rationale

As all eyes are on the Fed’s preferred inflation gauge, the PCE index this morning, expectations are for further improvement on the data for inflation towards the 2% target. Given the market moving event, we will simply monitor existing positions today and not enter any new positions.

Our Trades

AXP – 49 DTE

Bullish Debit Spread – AXP has been trading between $228 and $231 over the last week. A break above $231 would indicate that further upside is on the table.

DHI – 49 DTE

Bearish Debit Spread – Continues to trade just above the $140 support level and we’re looking for a break lower as performance relative to the market remains poor. 

LIN – 21 DTE

Bearish Credit Spread – After filling the gap at $441, LIN has failed to break higher and now at risk of pulling back to its $425 support level. 

MS – 35 DTE

Bullish Credit Spread – MS remains bullish and support at $95 is confirming our bullish thesis on this trade.

PYPL – 35 DTE

Bullish Credit Spread – Yesterday’s price action suggests $58 support remains strong, we’re looking for a bounce higher above $60. 

RACE – 21 DTE

Bearish Debit Spread – Relative performance remains poor and at risk of pulling back to its $400 support and potentially lower. 

Investment Rationale

In light of AMZN’s announcement for plans to create a direct low-cost channel with Chinese goods to counter PDD’s Temu, we should consider cutting losses on our PDD trade despite not triggering our stop loss levels. This is an example where the fundamentals changed after we entered a trade and the original thesis is no longer valid. When this happens it is best to cut losses when they are still small and move on instead of waiting and hoping. 

Closing Trade

• PDD – 47.69% loss: Buy to Close 4 Contracts (or 100% of your Contracts) August 2nd $143/$135 Put Vertical Spreads @ $4.15 Debit. DailyPlay Portfolio: By Closing all 4 Contract, we will be paying $1,660 We opened these 4 Contract on June 24 @ $2.81 Credit. Our average loss, therefore, is $134 per contract.

MS Bullish Opening Trade Signal

Investment Rationale

As we approach the end of the quarter and earnings season is ramping back up, banks are on the docket first. After outperforming the S&P 500, financials have lost ground over the past few weeks to technology, but started to play catchup this week. Morgan Stanley recently pulled back to a major support level and looks attractive from a risk/reward perspective to add long exposure as financials start to show performance again. 

Technical Analysis

Morgan Stanley recently broke out above a major resistance level at $92-94 that has been in place for over a year and recently just retested it as support. With a potential breakout above its $98 resistance level, MS is setup to potentially retest its all-time highs around $110, our upside target. 

MS – Daily

Fundamental Analysis

From a valuation perspective, MS is trading on the upper end of its historical range at 1.7x book value. However, it is expected to grow at a healthy clip relative to its peers with 8% EPS growth and 3-4% Revenue growth expected over the next few years. Additionally, if lighter capital rules are put in place by the Fed from its annual stress test, it would be a significant positive factor for banks such as MS. 

Trade Details

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish Credit Spread

Details: Sell to Open 7 Contracts August 2nd $97/$92 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 # contracts for your portfolio.

Trend Continuation Signal: This is a bullish trade on a stock that is trading higher and is expected to break out above a level of resistance.

1M/6M Trends: Bullish/Bullish

Relative Strength: 7/10

OptionsPlay Score: 105

Stop Loss: @ $4.02 Debit. (100% loss to the value of premium received)

View MS Trade

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. 

View MS Trade

Closing Trade

• DHI – 72.83% loss: Sell to Close 7 Contracts (or 100% of your Contracts) July 5th $140/$130 Put Vertical Spreads @ $0.75 Credit. DailyPlay Portfolio: By Closing all 7 Contracts, we will receive $525. We opened these 7 Contracts on May 10 @ $3.22 Debit. The average loss, therefore, is $247. 

DHI Bearish Opening Trade Signal

Investment Rationale

DHI continues to trend lower in the direction of our thesis but our Debit Spreads expires in less than two weeks and is running out of time. We will believe in our overall thesis so I am advocating that we roll the July 5 $140/130 Put Vertical to an Aug 16 $140/130 Put Vertical for a Net Debit of $2.02 Debit ($2.77 – $0.75) to buy ourselves 2 more months of time for DHI to breakdown below the key $140 support. 

We Roll this trade by Closing the existing Trade and Opening a new one.

DHI – Daily

Trade Details

Strategy Details

Strategy: Long Put Vertical Spread

Direction: Bearish Debit Spread

Details: Buy to Open 8 Contracts August 16th $140/$130 Put Vertical Spreads @ $2.77 Debit per Contract.

Total Risk: This trade has a max risk of $2,216 (8 Contracts x $277) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $277 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bearish trade on a stock that is trending lower.

1M/6M Trends: Neutral/Mildly Bearish

Relative Strength: 4/10

OptionsPlay Score: 126

Stop Loss: @ $1.39 Credit. (50% loss of premium)

View DHI Trade

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. 

View DHI Trade

PDD Bullish Opening Trade Signal

Investment Rationale

In the current environment, it’s hard to find valuation bargains with growth stocks, but PDD stands out from the rest. With fast growing multi-national eCommerce brands, PDD is generating substantial cash flow yet trades at a substantial discount and presents an attractive investment opportunity. 

Technical Analysis

PDD has been trading in a range between $110 and $150 and recently the price action suggests a potential breakout above its $150 resistance level. After breaking out above a minor resistance level at $138, its pulled back to retest as support and the risk/reward favor adding long exposure at these levels to setup for a potential breakout. 

PDD – Daily

Fundamental Analysis

Trading at 12x forward earnings, it almost looks like a mistake when you consider the industry leading 26% Net Margins and the 40-50% EPS and Revenue growth analysts are expecting over the the next few years. This represents a substantial discount to the multiples that fast growing companies typically would trade for. 

Trade Details

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish Credit Spread

Details: Sell to Open 4 Contracts August 2nd $143/$135 Put Vertical Spreads @ $2.98 Credit per Contract.

Total Risk: This trade has a max risk of $2,008 (4 Contracts x $502) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $502 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bullish trade on a stock that is trading higher and recently found a new level of support.

1M/6M Trends: Mildly Bearish/Bullish

Relative Strength: 4/10

OptionsPlay Score: 93

Stop Loss: @ $5.96 Debit. (100% loss to the value of premium received)

View PDD Trade

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. 

View PDD Trade