Taking Profits

AA – 48% Gain: Short Dec 31, 2022 $47/$42 Put Vertical @ $1.03 Debit

View GLD Trade

The bearish DailyPlay for Thursday, December 8th is the SPDR Gold Trust ETF (GLD). GLD has experienced a long-term bearish trend and a strong decline in recent weeks. Price has retraced higher over the last few days on very weak momentum indicating further downside. 

Both 1M and 6M trends are bearish and with a technical score of 4 (out of 10), GLD is a weak ETF that is expected to move lower from current levels. The next areas of support for GLD are $164 and $161. 

As this is a credit spread, look to take profits at 50% gain and cut losses at 100%:

• Take Profits: $0.87 Debit
• Stop Loss: $3.46 Debit

View SQ Trade

The bearish DailyPlay for Wednesday, December 8th is Square Inc (SQ). Square has experienced a strong decline as valuations remain high but revenue and EPS growth has decelerated significantly. 

Fundamental View

• While longer term fundamentals look promising, SQ is very highly valued which makes it vulnerable to revenue and EPS deceleration having a larger impact on share price – which has been the case. 
• SQ’s Cash App segment currently has 40 million subscribers, a fraction of its main competitor PayPal
• Earnings Feb 24, 2022 (78 days)

Technical View

• Break below $200 major support level and retracement higher provides a good bearish entry point. 
• Weak technical score (3 out of 10)
• Bearish 1M and 6M trends

View SQ Trade

View AMD Trade

The bullish DailyPlay for Wednesday, December 8th is Advanced Micro Devices (AMD). AMD is part of the Technology sector that has experienced a sharp rebound in recent days

Fundamental View

• Meta’s adoption of AMD CPU’s for data centers provides significant upside potential
• Next gen EPYC processor expected to grow market share in this space 
• Earnings Jan 25, 2022 (48 days)

Technical View

• Pullback to an area of support and bounce higher provides a good risk/reward bullish entry
• Very strong technical score (10 out of 10)
• Bullish 6M trend

View AMD Trade

Taking Profits

• IBB – 66% Gain: Short Dec 31, 2022 $154/$161 Call Vertical @ $0.85 Debit

DailyPlay Positions Outlook:

Equities remain resilient at key levels despite the uncertainty regarding the Omicron strain. SPY and QQQ managed to hold on to their key levels in the last two trading sessions and are expected to open higher as new data highlighting that the new variant only showcases mild symptoms in patients provides encouragement for investors. China also cut rates by 50 basis points which provided a boost for global equities as the 2nd largest economy in the world aims to bolster growth after a disappointing year. We take this opportunity to close out the bearish IBB position that has exceeded the take profit level after a strong decline yesterday.

Prakash Vijayanath
Analyst at OptionsPlay

View BA Trade

Market Outlook:

Another week of high volatility saw equities decline significantly on Friday. Both SPY and QQQ moved 0.87% and 1.74% lower respectively but still managed to maintain above key support levels which is encouraging heading into this week. We have seen significant rotation into Utilities and Staples as defensive sectors provide protection against the broader market sell-off. Small caps suffered the most last week ending the week declining over 2% and back to the major $213 support level, once again falling to the year-long range between $213 and $233 which is concerning. Volatility in bonds was also high as TLT broke above the major $151 resistance level with strong momentum sending yields below the 137 basis point level. 

BA Bearish Trade Idea:
Our bearish trade idea today is Boeing (BA). From a macro and fundamental perspective, BA has been on the backfoot due to lack of travel demand caused by COVID as well as the grounding of the 737 MAX airliner due to safety concerns. While we do see the slight improvement in revenues and EPS trends recently, the timing of the new variant causing additional travel restrictions adds further pressure for aircraft demand. We also see Airbus gaining market share in the narrowbody category relative to Boeing. From a technical perspective, BA has broken below the $205 area of support and has failed to break back above it in recent days. Both 1M and 6M trends are bearish and with a technical score of 3 (out of 10), BA is a weak stock that will likely continue lower. 

As this is a credit spread, look to take profits at 50% gain and cut losses at 100%:

• Take Profit: $4.17 Debit
• Stop Loss: $16.70 Debit

View BA Trade

Closing Trades

• WMT – 69% Gain: Short Dec 31, 2022 $143/$148 Call Vertical @ $0.55 Debit

DailyPlay Positions Outlook:

As systemic risks continue to rise due to the ambiguity of the new Omicron variant, we have taken a hands-off approach with the DailyPlay positions this week. Market volatility remains high with the VIX reaching 30 twice this week and with Non-Farm Payroll data being released today, we expect more volatility to end the week. While equities did recover yesterday, downside risks remain and the uncertainty of the new variant has not changed. We take this opportunity to take profits on the WMT trade that was opened this week. 

Prakash Vijayanath
Analyst at OptionsPlay

Closing Trade

XPEV – 30% Gain: Long Jan 21, 2022 $45/$60 Call Verticals @ $6.05 Credit

DailyPlay Positions Outlook:

As Omicron concerns continue to mount, equities remain on the backfoot this week and continue to decline with the SPY and QQQ declining 1.11% and 1.7% respectively yesterday. While the key $382 level remains intact for QQQ, SPY broke below the $453 support level yesterday which provides evidence of a further move lower this week. We take this opportunity to close out the XPEV trade for a limited profit despite a significant pullback yesterday. 

Prakash Vijayanath
Analyst at OptionsPlay

EXPE – 35% Loss: Long Jan 21, 2022 $175/$195 Call Vertical @ $4.31 Credit

C – 94% Loss: Long Dec 17, 2021 $70/$72.5 Call Vertical @ $0.15 Credit

DailyPlay Positions Outlook:

As uncertainty creeps into markets due to the new Omicron variant, stocks sold off heavily yesterday. However, there has been a recovery in pre-market as well as European and Asian equities rebounding strongly this morning and the major US indices are expected to open higher. While this is encouraging, the uncertainty and lack of data on the new variant is concerning. This week, our priority will be to reduce exposure in our DailyPlay portfolio and close trades. We take this opportunity to close out C and EXPE. 

Prakash Vijayanath
Analyst at OptionsPlay

Closing Trades

• CCI – 51% Gain: Short Dec 17, 2021 170/180 Put Verticals @ $1.65 Debit

DailyPlay Positions Outlook:

Equities managed to recover yesterday after Friday’s strong decline. However, details about the new COVID variant are still fairly unknown and equities may be at significant risk in the event that the current vaccines do not provide any protection. The sharp rise in Delta cases, even before the Omicron variant discovery, already poses a threat to a year-end rally as many governments are once again considering lockdowns or partial lockdowns. This will likely have a large impact for Q4 earnings season. We take this opportunity to reduce the bullish exposure on our portfolio and take profits on CCI which has reached the target take profit level 

Prakash Vijayanath
Analyst at OptionsPlay