Closing Trade

• HSY -79.35% Gain: Buy to Close 1 Contract October 7, 2022 $230/$240 Call Vertical @ $0.82 Debit. DailyPlay Portfolio: By Closing the remaining 1 of the 3 Contracts, we will be paying $82. We took partial profits for this trade on September 12 at a $1.75 Debit. Therefore, the average gain on this trade is 63.73% and the average cost basis to exit this trade is $1.44 Debit.

Partial Closing Trade

• UNG -25.00% Gain: Buy to Close 7 Contracts October 21, 2022 $27/$24 Put Verticals @ $1.11 Debit. DailyPlay Portfolio: By Closing 7 of the 14 Contracts, we will be paying $777.

Investment Rationale

Price action for equities started with some strength which faded by the end of the day. The S&P is trading just above its $3900 level and has now broken below the daily cloud model. Our base case is for equities to continue lower unless it closes above $3950 by Friday and continues higher. As we wait for further clarify from markets going into the Fed decision next week, we take this opportunity to close out HSY which has reached the daily cloud bottom target. And we are also closing half of our UNG after Nat Gas saw a nearly 9% correction today, taking partial profits.

Close Remaining 1 Contract on HSY @ $0.82 Debit

Close Half UNG @ $1.11 Debit

S&P 500 Daily

ARKK Bullish Opening Trade

View ARKK Trade

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish

Details: Buy to Open 8 Contracts November 18, 2022 $45/$54 Call Vertical Spreads @ $2.72 Debit.

Total Risk: This trade has a max risk of $2,176 (8 Contracts x $272).

Counter Trend Signal: This is a Bullish trade on a stock that is experiencing a bearish trend. 

1M/6M Trends: Neutral/Bearish

Technical Score: 3/10

OptionsPlay Score: 104

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that if there is a multi-leg option strategy, it should be entered as a single trade. 

Please note these prices are based on the previous day’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. This will be reflected in the Portfolio tab within the OptionsPlay platform.

Investment Rationale

Despite the previous day’s heavy selloff, markets remained neutral today and held a major support level at the daily cloud bottom @ $3900. Despite the larger bearish backdrop, risk to rewards favor the upside at the moment unless we break below $3900, targeting $3825 to the downside. One name that has been making the news and crossed our scans last week is Cathie Wood’s ARKK. Printing a Weekly -13 Setup signals exhaustion to the downside and an opportunity to play for a bounce higher. It still sits below the weekly conversion line, but a break higher would target $54 weekly base line, roughly 20% higher. We are using this opportunity to play for a bounce in the markets with ARKK using a Call Debit Spread to reduce our overall risk in a bearish market.

Buy to Open Nov 18 $45/$54 Call Vertical @ $2.72 Debit

ARKK Trade Setup

ARKK – Weekly

Closing Trades

• BA – 122.47% Gain: Sell to Close 2 Contracts Sept 16, 2022 $160/$145 Call Verticals @ $10.79 Credit. DailyPlay Portfolio: By Closing the remaining 2 of the 4 Contracts, we will be receiving $2,158. We took partial profits for this trade on September 6 at a $7.52 Credit. Therefore, the average gain on this trade is 88.76% and the average cost basis to exit this trade is $9.16 Credit
• BEAM – 132.65% Gain: Sell to Close 2 Contracts Sept 16, 2022 $60/$50 Put Verticals @ $5.70 Credit. DailyPlay Portfolio: By Closing the remaining 2 Contracts, we will be receiving $1,140. We took partial profits for this trade on August 18 at a $4.30 Credit, and then again on August 30 at a $5.22 Credit. Therefore, the average gain on this trade is 99.18% and the average cost basis to exit this trade is $4.88 Credit.

Investment Rationale

Equities sold off heavily yesterday with SPX down over 4% and Nasdaq over 5% on the day after a higher than expected CPI print. The Daily SPX cloud model has now retraced back into the cloud and near $3900 support, if broken, we will likely see the next support at $3825. We are taking this opportunity to close out short positions that are now profitable and near expiration.

Close remaining BA position @ $10.79 Credit.

Closing remaining BEAM position @ $5.70 Credit.

HLT Bearish Trade Idea

View HLT Trade

Strategy Details

Strategy: Long Put Vertical Spread

Direction: Bearish

Details: Buy to Open 8 Contracts October 21, 2022 $135/$125 Put Vertical Spreads @ $2.67 Debit.

Total Risk: This trade has a max risk of $2,136 (8 Contracts x $267).

Counter Trend Signal: This is a Bearish trade on a stock that is experiencing a mildly bullish trend. 

1M/6M Trends: Bullish/Mildly Bullish

Technical Score: 6/10

OptionsPlay Score: 150

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that if there is a multi-leg option strategy, it should be entered as a single trade. 

Please note these prices are based on the previous day’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. This will be reflected in the Portfolio tab within the OptionsPlay platform.

Investment Rationale

As the equity market continues a grind higher into resistance levels, we are starting to take a look at bearish opportunities in consumer names that are showing signs of exhaustion and underperformance. HLT has been a name that has stuck out with an unreasonably premium valuation relative to its peers, while starting to shows signs of exhaustion after a near 30% rally from the June lows. Additionally, it is trading up against the weekly cloud bottom and base line which converge at $138 forming a strong level of resistance. Coupled with the Daily Setup +13 count that we printed on yesterday, I’m looking for a reversal lower back towards the $120’s.

 Buy to Open HLT Oct 21 $135/$125 Put Vertical @ $2.68 Debit.

HLT – Weekly

Closing Trades

• HSY – 55.92% Gain: Buy to Close 2 Contracts October 7, 2022 $230/$240 Call Vertical Spreads @ $1.75 Debit. DailyPlay Portfolio: By Closing 2 of the 3 Contracts, we will be paying $350. 
• XLF – 85.29% Gain: Buy to Close 30 Contracts September 16, 2022 $33/$32 Put Vertical Spreads @ $0.05 Debit. DailyPlay Portfolio: By Closing all 30 Contracts, we will be paying $150. 
• NEM – 86.96% Loss: Sell to Close 6 Contracts Sept 16, 2022 $45/$50 Call Verticals @ $0.21 Credit. DailyPlay Portfolio: By Closing the remaining 6 of the 12 Contracts, we will be receiving $126. We took partial profits for this trade on September 2 at a $0.14 Credit. Therefore, the average loss on this trade is 89.13% and the average cost basis to exit this trade is $0.18 Credit.

Investment Rationale

After a small rally last week, markets will likely continue higher to test the major resistance area of $4106-$4283 with opportunities to seek bearish exposure on any further strength. Gold and Bonds remain just above a major support level and Bitcoin near a major resistance level. Look for breaks of these key levels in the coming weeks for large potential opportunities. We are using this time to reduce long exposure and take profits on short positions that are near take profit levels.

SPX – Daily

View UNG Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 14 Contracts October 21, 2022 $27/$24 Put Vertical Spreads @ $1.48 Credit.

Total Risk: This trade has a max risk of $2,128 (14 Contracts x $152).

Counter Trend Signal: This is a Bullish trade on a stock that is experiencing a mildly bearish trend. 

1M/6M Trends: Mildly Bearish/Bullish

Technical Score: 1010

OptionsPlay Score: 108

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that if there is a multi-leg option strategy, it should be entered as a single trade. 

Please note these prices are based on the previous day’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. This will be reflected in the Portfolio tab within the OptionsPlay platform.

Investment Rationale

Before the market open on Monday, Rick laid out a bearish tactical case for Natural Gas given the excessive bullishness from traders despite a bullish longer-term view. With Natural gas now over 21% lower in 2 weeks and 12% in the past 4 trading sessions, I see an opportunity to play for a neutral bounce. This also coincides with a -9 Setup on the Daily Chart and the Daily Cloud top acting as a level of support for natural gas. Additionally, the elevated implied volatility on this selloff provides an opportunity to harvest volatility by selling a Put Vertical for nearly 50% of the vertical width.

Sell to Open Oct 21 $27/$24 Put Vertical @ $1.48 Credit.

UNG – Daily

Closing Trade

• USO – 89.57% Loss: Sell to Close 8 Contracts Sept 16, 2022 $75/$81 Call Verticals @ $0.24 Credit. DailyPlay Portfolio: By Closing all 8 Contracts, we will be receiving $192. 

Trade Adjustment

• INTC – 64.19% Unrealized Loss. Roll the Sept 9 $38 Call to the Oct $35 Call @ $0.24 Credit
• Buy to close Sep 9, $38 Call @ $0.01 Debit (originally opened at $0.45 credit)
• Sell to open Oct 21, $35 Call @ $0.25 Credit
• This results in a reduced premium for the INTC Long Call Diagonal Trade to $2.86 ($3.10 – $0.24)

Investment Rationale

Bulls managed to muster the most strength that we’ve seen in a few weeks yesterday. We closed just above the top of the Daily Cloud and we will see bulls can push higher today into the 4050-4100 resistance area (conversion and base line), otherwise, we could see a retest of the 3900 support (cloud bottom) and a potential break towards 3700. Any further strength would be an opportunity to seek additional bearish exposure. Until then we will take this opportunity to reduce some of our long exposure in USO on weakening demand outlook and adjusting our INTC diagonal as we approach the expiration of the short strike.

Close the Full USO Position @ $0.24 Debit

Roll the Sept 9 $38 Call to the Oct $35 Call @ $0.24 Credit

S&P500 Index

View XOM Trade

Strategy Details

Strategy: Short Call Vertical Spread

Direction: Bearish

Details: Sell to Open 6 Contracts September 23, 2022 $95/$100 Call Vertical Spreads @ $1.99 Credit.

Total Risk: This trade has a max risk of $1,806 (6 Contracts x $301).

Counter Trend Signal: This is a Bearish trade on a stock that is experiencing a bullish trend. 

1M/6M Trends: Bullish/Bullish

Technical Score: 1010

OptionsPlay Score: 103

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that if there is a multi-leg option strategy, it should be entered as a single trade. 

Please note these prices are based on the previous day’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. This will be reflected in the Portfolio tab within the OptionsPlay platform.

Investment Rationale

After what appeared to be a day that we could have seen upward prices from how futures traded overnight, yesterday saw those gains evaporate to close lower on the day. Again, we’re getting a sense that the market can’t hold rallies, and in many ways, it’s acting the opposite of how the SPX traded in 2021, when it could barely hold losses.

With crude oil looking more and more like its weekly cloud is going to pose overhead resistance going forward, let’s look to short a XOM Sept. 23nrd $95/$100 call spread for what closed yesterday at $2.07 mid. (The higher “hedge” strike would be at a new closing high for the post-July rally.)

XOM – Daily

As a reminder, today is my last OP activity until I return from vacation on Monday, Sept. 18th. Tony will handle all the Daily Plays and webinars for me until then.

Partial Closing Trade

• NEM -91.30% Loss: Sell to Close 6 Contracts Sept 16, 2022 $45/$50 Call Verticals @ $0.14 Credit. DailyPlay Portfolio: By Closing 6 of the 12 Contracts, we will be receiving $84. 

Investment Rationale

Stocks made a midday rebound and were able to hold on with a day-ending rally to finish Thursday with a gain for the SPX, NDX and DIA. The SPX bounced on its uptrend line from the June low, as well as a TDST Line at 3921. Given the recent rejection of the downtrend line from all-time highs and the bounce today on the uptrend line from the 2022 low, perhaps we get a little reprieve today and next week. However, I do believe that rallies are still meant to sell into, as nothing new has yet changed the bigger macro fundamentals that are not in favor of a general bull market.

Today is the last Friday of the true summer season, and with markets closed in the US on Monday, I’m not apt to want to buy an option today, and not willing to be a seller down here, either. So, it’s like most summer Fridays where we watch and make little tweaks as needed to our overall portfolios.

I do think that we need lighten up on our long NEM Sept. 16th $45/$50 call spread. I’ve held off reducing until now because of the daily chart marking a -13 signal on Tuesday, but with price falling beneath NEM’s uptrend line on breakout dollar strength, gold and gold-related names are under deep pressure. Let’s take half off today.

NEM – Daily

Bearish Opening Trade Signal

View ICLN Trade

Strategy Details

Strategy: Long Put Vertical Spread

Direction: Bearish

Details: Buy to Open 30 Contracts October 21, 2022 $22/$20 Put Vertical Spreads @ $0.63 Debit.

Total Risk: This trade has a max risk of $1,890 (30 Contracts x $63).

Counter Trend Signal: This is a Bearish trade on a stock that is experiencing a neutral to bullish trend. 

1M/6M Trends: Neutral/Bullish

Technical Score: 10/10

OptionsPlay Score: 135

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that if there is a multi-leg option strategy, it should be entered as a single trade. 

Please note these prices are based on the previous day’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. This will be reflected in the Portfolio tab within the OptionsPlay platform.

Investment Rationale

Equities are failing to hold any attempt of gains. In fact, I am seeing a pattern along these lines: 

1. Asia rallies
2. The US tries to hold those gains on the NY open
3. Europe closes (11:30 NY time) and then it’s sell, sell, sell

That’s not atypical for a bearish market mode.

S&P futures are down some 20 pts. (3936) as I write this Wednesday evening. The bounce I was hoping to see from SPX 4050/4023 has not materialized. The goal was to again be a seller – this time anything near 4125. It’s looking less and less like that’s in the cards.

Looking for stocks/ETFs that are showing failing rallies, I see the iShares Global Clean Energy ETF (ICLN) potentially fitting the bill. It topped right at the Risk Level ($23.83) from the daily +13 Combo upside exhaustion signal, and has traded off since then. Given the large unfilled gap that this could easily fill on continued market weakness, let’s look to buy a ICLN October 21st $22/$20 put spread for what closed yesterday at $0.625 mid.  That represents 31% of the spread differential, making for a possible max. profit of $1.375.

ICLN – Daily