View ALGN Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 2 Contracts July 8, 2022 $265/$245 Put @ $6.25 Credit.

Total Risk: This trade has a max risk of $2,750 (2 Contracts x $1,375 per contract).

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

1M/6M Trends: Neutral/Bearish

Technical Score: 1/10

OptionsPlay Score: 87

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. 

Investment Rationale

When I see a large down move in a stock – that then dramatically decreases its average trading range AND goes sideways for several price bars – it usually says to me that there is an institutional buyer quietly bidding for the name. This might very well be the case with Align Technology (ALGN). It’s had nearly four identical weekly small ranges in the past four weeks, since bottoming right by the weekly Propulsion Full Exhaustion level (~$247) a month ago – all while seeing its weekly range come into levels not seen in eight months. 

Given that this week also marks a Setup -9 count – the first of the whole decline – to me, it is now both a logical time AND location to view this as a play against support. We can do that by either selling a downside put spread or buying an upside call spread, and my inclination is to do the former, as I have a very defined level that I know I don’t want to be long any longer if breached (i.e., $245). Thus, I’m willing to short a July 8th $265/$245 put spread for $6.25 (i.e., yesterday’s closing mid-prices), which represents about 31% of the strike differential.

ALGN – Weekly

Closing Trade

• TSLA: 61.07% Loss: Sell to Close 3 Contracts June 17, 2022 $620/$600 Put Verticals @ $2.55 Credit. DailyPlay Performance: By closing 3 Contracts we will be receiving $765.

View new TSLA Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 2 Contract June 24, 2022 $695/$675 Put @ $7.57 Credit.

Total Risk: This trade has a max risk of $2,486 (2 Contract x $1,243 per contract).

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

1M/6M Trends: Bearish/Bearish

Technical Score: 2/10

OptionsPlay Score: 89

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. 

Investment Rationale

Here’s a pure technical trader’s play on Tesla (TSLA), simply using the cloud model’s Conversion and Base Lines as reference points, along with the Market Profile indicator (to see where the volume has traded in its recent bottoming process).

Price rallied from its 2022 low up to its Base Line (in orange) and then fell to its Conversion Line (in pink). I think that it can hold support around the $695/$675 level, as that lower number is also where little volume has traded. Therefore, we will look to sell a June 24th $695/$675 put spread for $9.675 (based upon yesterday’s closing mid-prices). That represents about 39% of the spread differential, and gives us downside protection in case the stock gets hit more than I currently expect it will.

TSLA – Daily

View V Trade

Strategy Details

Strategy: Long Put Vertical Spread

Direction: Bearish

Details: Buy to Open 4 Contracts July 15, 2022 $210/$190 Put @ $4.81 Debit.

Total Risk: This trade has a max risk of $1,924 (4 Contracts x $481 per contract).

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

1M/6M Trends: Bullish/Mildly Bullish

Technical Score: 9/10

OptionsPlay Score: 148

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. 

Investment Rationale

Our bearish trade idea for today is Visa Inc. (V) which is displaying some downside risk when one considers the current consumer spending and consumer confidence slowdown. From a technical perspective, V has experienced a long term underperformance relative to the market, which we expect to resume after a brief rebound. Price is also forming lower higher on the weekly timeframe while holding the $190 support. We have seen a slight slowdown in momentum in recent days which could indicate the end of the current rebound and potential reversal lower. 

Closing Trade

• UAA: 82.50% Gain:Buy to Close 2 Contracts June 24, 2022 $9 Cash Secured Puts @ $0.07 Debit. DailyPlay Portfolio: By Closing 2 Contracts, we will be paying $14. 

Taking Partial Profits

• NVDA: 49.80% Gain: Buy to Close 1 Contract June 17, 2022 &182.5/&167.5 Put Verticals @ $2.57 Debit. DailyPlay Portfolio: By Closing 1 of the 2 Contracts, we will be paying $257. 
• AXP: 58.15% Gain: Buy to Close 3 Contracts June 24, 2022 $160/$150 Put Verticals @ $1.36 Debit. DailyPlay Portfolio: By Closing 2 of the 3 Contracts, we will be paying $272.
• NFLX: 61.09% Gain: Buy to Close 1 Contract July 15, 2022 $170/$190 Put Verticals @ $4.55 Debit. DailyPlay Portfolio: By Closing 1 of the 2 Contracts, we will be paying $455. 
• ARKK: 65.15% Gain: Buy to Close 10 Contracts June 24, 2022 $41/$39 Put Verticals @ $0.46 Debit. DailyPlay Portfolio: By Closing 10 of the 20 Contracts, we will be paying $460. 

View NVDA Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 2 Contracts June 17, 2022 $182.5/$167.5 Short Put Vertical Spreads @ $5.12 Credit.

Total Risk: This trade has a max risk of $1,976 (2 contracts x $988 per contract). 

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

1M/6M Trends: Neutral/Bearish

Technical Score: 2/10

OptionsPlay Score: 86

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. 

Investment Rationale

First and foremost, the SPX is seeing some buying into the zone (4130—4020) I said need to hold on a pullback after last week’s 6%+ rally. Yesterday’s low reached 4074 – roughly halfway down into that zone before seeing the close at 4101.

So, if I look at a name that may have also bottomed last week and is now holding onto support in between that low and where it is now trading, I come across the very actively traded NVIDIA Corp. (NVDA). Its chart shows a daily -13 bottom downside exhaustion signal that then rallied and yesterday’s low ($181.22) held above its bearish Propulsion Momentum level ($179.92). That’s potentially bullish, so let’s play for this to continue higher to test the nearest Propulsion Exhaustion level at $197.15.

Let’s sell a short-dated June 17 $182.5/$167.5 put spread for a $5.13 credit, taking in about 34% of the strike differential, based upon yesterday’s closing mid-prices. When/if the price reaches the above target near $197, I can already tell you that we’ll want to remove half the position.

NVDA – Daily

Taking Profits

• $MET 89.84% Gain: Buy to Close 12 June 3, 2022 $69/$72 Call Verticals @ $0.13 Debit. DailyPlay Portfolio: By buying 12 Contracts we will pay $156.
• $CVX 155.43% Gain: Sell to Close 2 June 3, 2022 $160/$170 Call Verticals @ $9.17 Credit. On May 17, we closed 4 contracts of this position for $7.43 credit. This results in an average close price of $8.01 credit.  DailyPlay Portfolio: By selling 2 Contracts we will receive $1,834.

Adjustment Trade

$ARKK Trade Adjustment – 70.59% Unrealized Gain. Roll June 10, $39/$37 Short Put Verticals to June 24, $41/$39 Short Put Verticals to collect more premium:

• Buy to close June 10, $39/$37 Short Put Verticals @ $0.30 Debit (originally opened at $1.02 credit = $0.72 profit)
• Sell to open June 24, $41/$39 Short Put Verticals @ $0.60 Credit
• This results in an increased premium for the ARKK Short Put Vertical Trade to $1.32 ($0.60 + $0.72)

Investment Rationale

We have two open trades that expire on Friday, both of which are large gains. Let’s look to close them out to avoid dealing with any expiration issues.

The first is our short MET June 3rd $69/$72 call spread. We’re up about 90% on the trade, and with the stock having closed at $67.39 on Tuesday, let’s not take the chance that we get exercised on the $69 strike should the stock see a 2% gain over the next few days. So, let’s unwind that spread today. It closed yesterday at $0.15 mid-price (and we’re short from $1.28).

The other is a long CVX June 3rd $160/$170 spread. We paid $3.59 for it and yesterday it closed at $9.20 mid. We had previously taken off half for a large gain, and today we’ll take off the balance. 

Lastly, we’re going to roll up our short ARKK June 10th $39/$37 put spread, by taking that off today (we’re short at $1.02 and yesterday it closed at $0.30 mid), and roll that up to a short June 24th $41/$39 put spread (collecting $0.60 based on yesterday’s mid-closing price.)

ARKK – Weekly

View NFLX Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 2 Contracts July 15, 2022 $170/$190 Put Verticals @ $6.20 Credit.

Total Risk: This trade has a max risk of $2,760 (2 Contracts x $1,380 per contract).

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

1M/6M Trends: Neutral/Bearish

Technical Score: 1/10

OptionsPlay Score: 85

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. 

Investment Rationale

With Netflix Inc. (NFLX) being a dominant player in online streaming, this is a pivotal moment, as it is currently trading at 75% lower than its peak. By looking at the long-term chart since its IPO, NFLX has traded in a well-defined channel, and it is now trading towards the bottom of this channel, from where it is now starting to bounce higher off the $170 level. The first major resistance level is only at the $240 level. As NFLX is currently trading at around 15 to 16 times next year’s earnings, this stock is well-priced and it is a good place to start buying at this level. 

Special Notice

This is a conditional trade idea and the trade should not be taken immediately. Please read the Investment Rationale for more information on this trade. Also, keep in mind that the Credit received, the Max Risk, the Max Reward, as well as the OptionsPlay Score, will be different than what you see in this email, as we are waiting for the price to move more favorably before we enter the trade.

View QQQ Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 4 Contracts June 13 $292/$285 Put Vertical @ $1.93 Credit.

Total Risk: This trade has a max risk of $2,028 (4 contracts x $507 per contract). As this is a conditional order, the number of Contracts could change depending on the Total Risk at the time of opening the trade. We will base the numbers of Contracts on roughly $2,000 of Risk.

Counter Trend Signal: This is a Bullish strategy on an ETF that is experiencing bearish 1M and 6M trends.

1M/6M Trends: Bearish/Bearish

Technical Score: 4/10

OptionsPlay Score: 91

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. 

Investment Rationale

Yesterday saw a strong market rally after NVDA turned itself around after falling sharply after Wednesday’s post-close earnings report/guidance call. The SPX rallied 2%; the NDX 2.8%; and the talking heads on TV are back into bullish mode. Do they have a case?

Well, yes, they do. We’ve been waiting to see if the QQQ weekly cloud model’s Lagging Line was going to hold above its cloud bottom – something it’s been playing with for three weeks. Barring a major down-move today, that support near QQQ $287 is holding, and thus, we will lean bullishly near-term. That being said, I am not going to chase after the up-move on a Friday going into a three-day holiday weekend.

But I am willing to put on a bullish Short Put Spread IF we see the Qs trade down today to ~$295. If we see that, then we’ll look to enter a short June 13th $292/$285 put spread for what on Thursday went out at $1.93. (That credit should be a little higher if/when we’re able to put this on.) That represents about 28% of the strike differential, and gives us downside protection in case new lows come into play.

QQQ – Daily

I don’t know about you, but yesterday seeing the market move up post-Fed statement made me feel as if we may finally get a rally that can last beyond 24 hrs. Then, after the close, Nvidia’s earnings report/guidance didn’t give investors happy news, and the stock was quickly off 10%, making a hopeful bull move scenario get tossed down, again. (NVDA is just another one of the bellwether names that has really disappointed investors post-earnings, and keeps the see-saw market very much at play.)

When a market can toy with your emotions as easily as this one is doing right now, it is also actually sending some important messages – the most important of which is that what has worked in the past is not yet ready to work again. Our desire to “buy the dip” and to quickly get rewarded for it – as one could have done anytime in 2021 – is not yet an apparent successful strategy to employ. In fact, this year could still easily be much more about “selling the rally” as the more constant and successful way of approaching the 2022 market. (Now, if we could just get some rallies to sell.)

Several prominent bullish equity strategists and economists have eaten crow this year – unable to synthesize the macro changes that very quickly occurred. They’re still thinking that the 2021 market is this year’s market.  It’s not. It’s not going to be.  And their reticence to have made changes to their 2022 outlooks have cost their clients who followed them significant capital. (Even yesterday, one of the well-known popular economists lowered his forward earnings estimates and year-end forecast. But frankly, it’s too little and too late.) As a theoretical example, it’s like an analyst –after Netflix blew up in April – lowering their price target from $480 to $440 (with the stock at $225) – because they simply couldn’t come to terms with the fact that their analysis (and the fact that they are supposed experts on the name) completely missed what the real story was. Instead of making the target a far more realistic number that investors can make reason with, we are still often given an unrealistic and unlikely reachable target because they simply can’t face the music of a name and sector that they completely missed the boat on.

Though rallies can happen at any time, we haven’t yet seen what I call “Analyst White Flag Day” – when droves of sell-side analysts finally throw in the towel on their unrealistic upside price target.  Until that happens, I’d still think we all need manage our portfolios to lower risk exposure, as well as raise cash to be able to buy when we can get a better sense that we’ve finally seen the lows.

CVX – Daily

An update on our CVX long June 3 $160/$170 call vertical spread: We’ve already taken half off, and with the stock closing yesterday at $175.41, we are in good place with just over a week to go to expiration. However, if we see any close between now and June 2 beneath $166.94, we will exit the remaining contracts we still have on.

– Rick Bensignor
Chief Market Strategist

When I spend two hours looking at many dozens of charts, and I can’t find a single trade idea that I’m comfortable putting on, it says a lot about the market location right now. Too many charts are approaching support against old lows from sometime over the past few years, while also seemingly incapable of holding a rally that lasts more than a day. It makes it very tough to put on a new high-confidence level trade. And thus, there are times – and this is one of them – that I simply don’t want to add a new long or short position with prices where they currently are located. 

However, I’ve been pretty vocal that I am not a US Dollar fan (making me one of the very few). Looking at the PowerShares DB US Dollar Bullish ETF (UUP), we see that the recent high from two weeks ago was precisely against the highest weekly close in March 2020 (and actually, since this ETF started back in 2008).

So, if we see this rally back up to the $27.40 to $27.70 level, we’ll then look to put on some type of bearish play. I’m not even going to show you the possible strikes just yet as the deltas drop dramatically at even the smallest strike differential. (At current quoted prices, selling a late-June $27.50/$28.50 call spread would only take in a very small percent of the strike differential.) Therefore, we will watch and monitor this and alert you via email should we get the chance to put this on sometime in the next week or two at our preferred entry zone.

UUP – Weekly

Lastly, we continue to see very significant intra-day swings. That’s professional money managers – along with individual investors – being made mince-meat by computers that are trying to play in what’s becoming an even more illiquid environment. If the big guys and gals aren’t getting it right, then it’s even harder for individuals to align with what they’re doing because the pros are as confounded as anyone else.

The bottom line: Keep your powder dry for when better opportunities present themselves.