Closing Trade

• UNG – 115.46% Loss: Sell to Close 18 Contracts (or 100% of your Contracts) March 10th $10/$12.50 Call Vertical Spreads @ $0.09 Credit. DailyPlay Portfolio: By Closing all 18 Contracts, we will receive $162.

Investment Rationale

The S&P 500 fell over 80 points to below $4,000 yesterday on the back of concerns of higher interest rates. Treasuries yields rose sharply with the 10-year rising 14bps to 3.96%, as the bond market shifts to a more hawkish Fed. Our expectation is that equities will continue to remain under pressure as markets reassess how sticky inflation will likely be and what the Fed’s actions will be to bring it back to their 2% target. SPX has now within spitting distance of its trendline support. A break below trendline support and $3950 would target $3850 to the downside.

S&P 500 – Daily

As natural gas continues its decline and the inability to hold the key $8.50 level over the past few trading sessions, we would take this opportunity to cut losses on our open debit spread. As a rule of thumb with long options positions that are approaching the last 3 weeks of expiration, if the trade is not moving in the expected direction quickly, it’s better to cut losses and reassess the trading thesis and timing. We are at this point going to close out the full balance of the position of UNG and look to reestablish at lower levels and time

UNG – Weekly

USO Bullish Opening Trade Signal

View USO Trade

Strategy Details

Strategy: Long Iron Condor

Direction: Bullish

Details: Buy to Open 5 Contracts Jul 21st $71/$77 $63/$57 Iron Condors @ $3.85 Debt per contract.

Total Risk: This trade has a max risk of $1,925 (5 Contracts x $385).

Counter Trend Signal: This is an ETF that is currently bearish and is expected to bounce higher.

1M/6M Trends:  Bearish/Bearish

Technical Score: 3/10

OptionsPlay Score: 97

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

With markets closed yesterday, we only have how the futures traded to get a sense of what today may look like, and as I write this Monday night, I’m seeing the S&P futures down about 18 points from last Friday’s close. I continue to believe that the way to play the market is for a continued pullback, using a Friday close above SPX 4148 as the stop out of that gameplan.

For a new idea, let’s take advantage of a flat oil market in 2023, but one that has added significant open interest since Jan. 1. (to the tune of over 330,000 contracts – a huge surge considering the market hasn’t moved since then). My experience of having traded futures markets for over 40 years would suggest to me that a large directional move is coming, as one of those two sides of recently added new longs or shorts will be on the wrong side of the move – ultimately exacerbating the move even further as the losing side will be forced to unwind their positions.

As such, I want you to consider putting on a long iron condor in the USO July 21st expiration, buying the $71/$77 call spread (it closed Friday at $1.95 mid) and buying the $63/$57 put spread (it closed Friday at $1.90 mid) for a combined cost of $3.85. I’m willing to give up the first 6% or so move in crude oil before this idea starts capturing any juice to it, but when oil really starts to move directionally, I am planning on it being far greater than a single digit percentage move.

Crude Oil – Daily

USO – Daily

Partial Closing Trade

• BYND – 25.00% Gain: Sell to Close 10 Contracts (or 50% of your Contracts) Mar 17th $17.50/$22.50 Call Vertical Spreads @ $1.15 Credit. DailyPlay Portfolio: By Closing 10 of the 20 Contracts, we will receive $1,150. 

Investment Rationale

The well-higher than expected PPI number yesterday never allowed the SPX to go green on the day, and then a late sell-off sent it spilling to over a 50-point loss (-1.38%) to pull the index down to 4090, its worst close since Feb. 9th. But more importantly, the chances of today closing above 4148 are greatly reduced, and thus, it makes sense to me to lighten all tactical long positions put on since the Oct. low has been made.

Within 100 pts. of yesterday’s SPX close, I see the 4050 put strike with the most open interest (~7,700 contracts) that expire today. On the call side, the largest open interest is in the 4100 strike (some 8,300 contracts) which can also go out worthless depending upon how today trades. These large open interest strikes often act as trading magnets on expiration days.

Looking at where we have some long exposure that I want to actively manage, yesterday Moderna (MRNA) got some bad news on drug trial results, sending the stock down $5. We are short the Feb. 24th $170/$160 put spread from $4.98. It went out yesterday at $3.46 mid. I’d place a buy stop back at breakeven entry to protect this from potentially turning into a loser.

We are also long 20 March 17th BYND $17.5/$22.5 call spreads from $0.92. Yesterday it closed at $1.15 on almost a 2% pullback in the stock. Let’s kick out of 10 of the 20 today to lock in what yesterday closed with a 25% gain since putting the trade on.

For now, I will stick with the several bearish trades that we have open in the portfolio.

COIN Bullish Opening Trade Signal

View COIN Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 2 Contracts Mar 10th $70/$54 Put Vertical Spreads @ $6.78 Credit per contract.

Total Risk: This trade has a max risk of $1,846 (2 Contracts x $923).

Trend Continuation Signal: This stock is currently bullish and found support to continue this uptrend.

1M/6M Trends:  Bullish/Bullish

Technical Score: 5/10

OptionsPlay Score: 92

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

Stocks pulled off a victory on Wednesday after being down early, to mark a new closing high in the SPX for the current rally started in October. The SPX closed at 4148 – the precise level I am keying on come this Friday’s close. A close above there that gets upside follow-through next week is bullish; a failure to get above 4148 on Friday’s close keeps me playing with a defensive approach, as it will be very similar to the failure at last August’s high (which also stopped against its bullish weekly Propulsion Momentum level (highlighted in yellow-colored rectangles).

SPX – Weekly

Looking at a new idea for today, notice that until earlier this month, both price and the daily cloud’s Lagging Line (in bold blue) had been beneath the daily cloud since late 2021. Then, in early Feb. price broke out upside of both the cloud and the Lagging Line broke out above its cloud, to both pullback and hold cloud support earlier this week, before rocketing higher yesterday. To me this looks like a breakout/test/breakout to put COIN back into a bullish posture in the near-term.

COIN – Daily

As such, with premiums quite elevated in this name (the implied vol of ATM puts is running at ~150%), we can sell a March 10th $70/$54 put spread ($54 was the low earlier this week). Based upon Wednesday’s closing mid-price of $6.775 for this spread, we can collect about 42% of the strike differential – a number I can easily live with for a credit spread. Do note that earnings come out next week on the 21st, so my plan is to carry this position through the earnings report.

SLV Bullish Opening Trade Signal

View SLV Trade

Strategy Details

Strategy: Cash Secured Put

Direction: Bullish

Details: Sell to Open 1 Contract Mar 17th $20 Cash Secured Put @ $0.55 Credit per contract.

Total Risk: This trade has a max risk of $1,945 (1 Contract x $1945).

Counter Trend Signal: This ETF is currently neutral to bearish and is expected to resume an uptrend.

1M/6M Trends:  Bearish/Neutral

Technical Score: 6/10

OptionsPlay Score: N/A

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

There was a ton of movement in the markets after the CPI number came out, but when all was said at the end of the day, we saw the SPX virtually flat on the day – not particularly helping us get a better clue on whether or not the bulls can push this up and through the key 4148 level by Friday’s close. What is still evident, though, is that this bullish weekly Propulsion Momentum level has not yet been properly breached, and as such, I will stay with my near-term call for a market pullback from this mid-4100 area.

Recall last week my desire to buy the iShares Silver Trust if it sold down to the uptrend line and cloud bottom area I had highlighted. Well, it got there yesterday while also marking a daily Setup -9 count – upping the odds that the timing is right to be bullish now, too.

SLV – Daily

As such, let’s look to put on a bullish play by either A) selling a single March 17th $20 cash-secured put. It closed at $0.545 mid-yesterday and gives you the chance to collect the premium if not exercised, or lets you get long SLV closer to $19.45 if exercised, or B) simply buying the SLV for the approximate $2000 that 100 shares would cost you.

Choice A makes you have the $2000 cash in your account, and you run the risk that silver sharply rallies and you’re not involved (other than collecting the ~$545).  In this case, you’re also covered down to $19.45 before you lose money.

Choice B makes you lay out the ~$2000 right away, and you either make or lose – penny for penny – what silver makes or loses. But it does gives you unlimited profit potential if silver materially rallies, whereas Choice A maxes out your return at ~$545.

Closing Trade

• XLF – 74.50% Loss: Sell to Close 7 Contracts (or 50% of your Contracts) Mar 3rd $35.5/$32.5 Put Vertical Spreads @ $0.17 Credit per contract.DailyPlay Portfolio: By Closing 7 of the remaining 14 Contracts, we will be receiving $119.

CRWD Bullish Opening Trade Signal

View CRWD Trade

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish

Details: Buy to Open 1 Contract Mar 10th $94/$130 Call Vertical Spread @ $17.81 Debit per contract.

Total Risk: his trade has a max risk of $1,781 (1 Contract x $1,781).

Trend Continuation Signal: This is a bullish trade on a stock that has recently turned bullish.

1M/6M Trends: Bullish/Neutral

Technical Score: 2/10

OptionsPlay Score: 94

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

Stocks rallied ahead of today’s key CPI report (out an hour before the NYSE opens), so we’ll at least see investors’ initial reaction to the number based on how the futures trade right after 8:30am ET. The consensus Y-O-Y inflation rate is expected to be 6.2%, with core inflation expected to be 5.5%. Bulls expect these numbers to come in as expected or better, but if they are higher, look for an immediate decline that I’d expect to continue down several percent over the balance of the week. I’ll focus on where the SPX is on Friday’s close: above 4148 will likely lead to a higher market over the next several weeks; lower than 4148 keeps me thinking the market is heading lower in the near term.

As per open positions, if today’s CPI pushes stocks higher, then we have to lower our bearish exposure on the long XLF March 3rd $35.5/$32.5 put spread we have on by removing half of the 14 spreads we have remaining.

XLF – Daily

For a new trade idea, I do like the very badly beaten-down name, CrowdStrike Holdings (CRWD). This sold off some 70% from its all-time high, and is considered one of the premier cybersecurity names out there.

CRWD – Daily

Let’s look to buy a position in the March 10th $94/$130 call spread (It closed yesterday at $17.81 mid).

Your only choice to make is whether or not to put this on in relation to the CPI number and whether you think the overall market is now headed higher or not.

Closing Trade

• JNJ – 102.02% Loss: Buy to Close 3 Contracts (or 100% of your remaining Contracts) March 17th $170/$165 Put Vertical Spreads @ $4.00 Debit per contract. DailyPlay Portfolio: By Closing the remaining 3 of 6 Contracts, we will be paying $1,200. We partially closed this trade on Jan 31 when we Closed 3 Contracts @ $3.54 Debit. Our average cost basis to exit this trade is therefore $3.77 Debit, and our average loss on this trade is 90.41%.

SPOT Bearish Opening Trade

View SPOT Trade

Strategy Details

Strategy: Short Call Vertical Spread

Direction: Bearish

Details: Sell to Open 7 Contracts Mar 17th $125/$130 Call Vertical Spread @ $2.30 Credit per contract.

Total Risk: This trade has a max risk of $1,890 (7 Contracts x $270).

Counter Trend Signal: This is a bearish trade on a stock that is overbought and expected to retrace lower. 

1M/6M Trends: Bullish/Bullish

Technical Score: 10/10

OptionsPlay Score: 107

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

Last week I called for a stock pullback; dollar rally; and bond decline, and all three played out to start what I think are continued near-term moves in all three. The failure of the SPX at the weekly bullish Propulsion Momentum level (4148) along with the inability for the TNX to close beneath its weekly Base Line at 3.50% two weeks ago – along with the highest SPX bullish sentiment reading in over a year – were the combined catalysts for that call I made.

Looking at our open position portfolio, the only one I want to change right now is the short JNJ March 3rd $170/$165 put spread. We have 3 spreads on, and with them down 102%, let’s take them off, despite the time remaining till expiration. (I try not to have bigger than 100% losses on credit spreads.)

As per a new idea, we recently had a great bullish trade in SPOT. I’m thinking we can now play it in the other direction, looking for a potential 10% downmove from it failing against the August ’22 high that by chance was accompanied by both Aggressive and standard Sequential +13 signals and a very overbought MACD reading.

SPOT – Daily

As such, let’s look to sell some juiced-up calls by shorting the March 17th $125/$130 call spread (it closed at $2.30 mid-price on Friday, representing a 46% premium collection of the $5 strike differential).

BYND Bullish Opening Trades

View BYND Trade

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish

Details: Buy to Open 20 Contracts Mar 17th $17.50/$22.50 Call Vertical Spreads @ $0.92 Debt per contract.

Total Risk: This trade has a max risk of $1,840 (20 Contracts x $92).

Counter Trend Signal: This is a stock that is currently neutral and is expected to continue its uptrend.

1M/6M Trends: Neutral/Neutral

Technical Score: 1/10

OptionsPlay Score: 162

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

Stocks gapped well higher on the open, but sold off straight and into negative territory by mid-session, and then closed well-lower and near the lows of the day. It was a telling day to me, and keeps me thinking that we’re going to see the 5% decline from the mid-4100 SPX zone that I declared early in the week. Today is Friday, with another weekly option expiration at hand.

Here’s an idea that to me appears as a low risk new long – perhaps even best as simply getting long the stock as it’s less than a $17 one. Let’s look at the below daily chart of Beyond Meat (BYND). It put in a horizontal 3.5 month base that recently broke out upside to stop on a Setup +9 count right into its first resistance area. It has now pulled back to the breakout point, which happens to coincide with its uptrend line. I can’t be sure it bottoms right here, but I’d say it’s not a bad place to get long (or minimally, start a long position).

BYND – Daily

Buying a call spread is always an option, especially in a low volatility environment like we’re now in. Looking at the March 17th $17.5/$22.5 call spread, we need to spend only about ~20% of the strike differential (but the stock is some 6% beneath the ATM strike, so a theoretical higher cost than the 20%). This is still within the realm of what we consider fairly priced, and certainly something you can consider.

Personally, I’d consider doing both a partial commitment using the above call spread, and now buying a partial position in the stock and scaling it down buying down to $15 on the rest. I look at this in terms of a medium-term holding period. Earnings are out on Feb. 23rd.

Closing Trade

• ABBV – 4.35% Gain: Buy to Close 7 Contracts (or 100% of your Contracts) Feb 10th $145/$141 Put Vertical Spreads @ $1.54 Debit.DailyPlay Portfolio: By Closing all 7 Contracts, we will be paying $1,078. 

Partial Closing Trade

• XLF – 68.62% Loss: Sell to Close 3 Contracts (or 20% of your remaining Contracts) Mar 3rd $35.5/$32.5 Put Vertical Spreads @ $0.21 Credit.DailyPlay Portfolio: By Closing 3 of the remaining 17 Contracts, we will be receiving $63. 

GE Bearish Opening Trades

View GE Trade

Strategy Details

Strategy: Long Put Vertical Spread

Direction: Bearish

Details: Buy to Open 12 Contracts Mar 24th $83/$77 Put Vertical Spreads @ $1.60 Debt per contract.

Total Risk: This trade has a max risk of $1,900 (12 Contracts x $160).

Counter Trend Signal: This is a stock that is currently bullish and overbought, and a retracement lower is highly likely.

1M/6M Trends: Bullish/Bullish

Technical Score: 10/10

OptionsPlay Score: 136

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

Investors took a little bit more realistic view of the economy and Chair Powell’s comments from Tuesday, and turned yesterday into a profit-taking day – mostly offsetting most of Tuesday’s 1.3% rally by falling 1.1% on Wednesday. GOOGL’s 7.6% decline made Communication Services the worst-performing sector, while Health Care was the best performer, with all 11 sectors down on the day.

This morning we’re going to see earnings from one of our open positions: ABBV. When we first sold the put spread, I had said we would carry it to right before today. We have until tomorrow for the Feb 10th $145/$141 put spread options to expire, but this morning’s earnings report will make this all but a binary “winner or loser” event. Just make sure you’re out of it by today’s close unless today shows a large gain.

ABBV – Daily

We are also long 17 March 3rd XLF $35.5/$32.5 put spreads. We previously took off about 1/3 of the position, and today we’ll take it down 3 more spreads to bring it to 14 remaining.

There’s a lot of up and down going on in the market, but that has not made me change my view that the SPX could get a 5% pullback from the mid-4100 level. As such, I am looking for new bearish ideas, and one that pops up is revisiting a successful bearish play we had on a couple of months ago: GE. Notice on its daily chart below that there is a real rhythm to this name, peaking on Aggressive Sequential +13 signals, and then bottoming into a Setup -9 count.

GE – Daily

A recent +13 showed up last week, and I’ll again look for this to head lower in the coming weeks. Thus, we’ll look to buy a March 24th $82/$77 put spread, which went out yesterday at $1.60 mid, or 32% of the strike differential (Notice that MACD sell signals just happen to come about one week after the prior two +13 signals showed up.) As is frequently the case, I’d rather be an option seller than buyer, but selling the call spread yielded something near 20% — a level I would never sell a spread for.

MRNA Bullish Opening Trades

View MRNA Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 3 Contracts Feb 24th $170/$160 Put Vertical Spreads @ $3.70 Credit per contract.

Total Risk: This trade has a max risk of $1,890 (3 Contracts x $630).

Counter Trend Signal: This is a stock that is currently bearish and oversold, with a strong potential for a quick bounce higher.

1M/6M Trends: Bearish/Neutral

Technical Score: 3/10

OptionsPlay Score: 88

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

Powell’s comments first sent the market higher, than that 50 point SPX gain turned into a 20 point loss, all to see another big rally to close the day up 53 points and a 1.3% gain. In the end, the Fed Chair’s comments were not enough to dissuade buyers from again bidding up stocks. The SPX did close on its highest level of the entire post-Oct. low rally, and did end the day at 4164, a quarter-percent above the 50% retracement up to the whole 2022 decline.

With the VIX at the low end of where it’s traded in the past year, I’m often seeing calls priced expensively and puts priced cheaply, making buying a call spread or selling a put spread less than an ideal way to put on a bullish bet. Nonetheless, we need to play within the context of what the market gives us.

Let’s look at the daily chart of Moderna (MRNA), which yesterday posted a daily Setup -9 count into its general support area and cloud bottom. It reports earnings on Feb. 23rd, just over two weeks from now. With the overall market holding up, let’s look for this to find some support around here. As such, let’s look to sell a Feb. 24th $170/$160 credit spread today. It went out yesterday at $3.70 mid, representing a credit of 37% of the strike differential – a mostly fair price for the spread (though a bit less than I’d typically like to receive as premium). The $170/$180 call spread costs $4.25, or ~43% of the strike differential – well too expensive to consider.

MRNA – Daily