View WMT Trade

The bearish DailyPlay for Tuesday, November 30th is Walmart Inc (WMT). WMT is part of the Staples sector which is at a high risk of a disrupted holiday season due to the rise in COVID cases. 

Technical View

• Break below and failed retest of the $143 level.
• Weakening Technical Score (6 out of 10)
• Bearish 1M and 6M trends

Fundamental View

• Risks include wage pressures, supply chain bottlenecks, and weaker consumer spending.
• Growing COVID cases globally will have a negative impact on WMT’s holiday sales. 
• Earnings: Feb 17, 2022 (79 days)

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

• Take Profits: $0.90 Debit
• Stop Loss: $3.60 Debit

View WMT Trade

View IBB Trade

The bearish DailyPlay for Wednesday, November 24th is the iShares Biotechnology ETF (IBB). IBB has been on a bearish trend since mid-September and has recently broken below a key support area ($154) with strong bearish momentum. Price pulled back late yesterday providing a better risk/reward bearish entry. 

Both 1M and 6M trends have been bearish since November 5th and with a technical score of 5 (out of 10), IBB is a neutral ETF that is expected to move lower from current levels. The next area of support for IBB is $146 and should this level be broken, additional support can be found at $138. 

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

• Take Profits: $1.25 Debit
• Stop Loss: $5.00 Debit

View IBB Trade

Closing Trade

CHTR – 55% Gain: Short Dec 17, 2021 $695/$730 Call Verticals @ $5.45 Debit

DailyPlay Positions Outlook:

Equities pulled back later in trading yesterday as yields jumped higher due to Jerome Powell being nominated for a 2nd term as Fed Chair, the more hawkish choice over the vice-chair nomination, Lael Brainard. While we do see some headwinds for equities approaching the year-end, especially with the surge in COVID cases in Europe, our overall outlook remains bullish. We are taking this opportunity to take profits on our short CHTR position which has reached our take profit level and is also very close to being 21 days away from expiration. 

Prakash Vijayanath
Analyst at OptionsPlay

View AA Trade

Market Outlook:

Performance in equities is showing signs of narrowing to the higher weighted mega-cap names as we start to see the Nasdaq-100 outperform the S&P 500 as well as small caps. Should this continue, it may indicate an unhealthy rally in equities with limited participation. The Nasdaq-100 broke to new all-time highs on Friday while the S&P 500 got rejected once again at the $470 level. We have also noticed more volatility in bonds and rates which are showing signs of further consolidation as markets continue to price in macro data in anticipation for the projected interest rate hikes. Despite the somewhat higher rate environment, higher beta growth stocks extend their outperformance relative to value stocks and this is expected to continue this week. 

AA Bullish Trade Idea:
Our bullish trade idea today is Alcoa Corp (AA). AA engages in the mining and production of aluminum products and has a large exposure to aluminum prices. Overall, the fundamentals for aluminum are strong with the ongoing recovery creating a growing demand. Looking at AA’s fundamentals, the balance sheet improvement has been impressive. AA has strong potential to generate free cash flow through increasing prices as well as cost optimization efforts. From a technical point of view, AA has been on a long-term bullish trend with price action shifting more neutral in recent weeks. Price has pulled back to an area of support which provides a good bullish credit spread opportunity. With a technical score of 10 (out of 10), AA is a very strong stock that will likely continue higher. 

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

• Take Profit: $0.99 Debit
• Stop Loss: $3.94 Debit

View AA Trade

Closing Trade

• MGM: 101% Loss– Short Dec 17, 2021 $50/$47 Put Vertical @ $2.35 Debit

View EXPE Trade

The bullish DailyPlay for Thursday, November 18th is Expedia Group Inc (EXPE). EXPE is part of the Discretionary sector which has experienced a pullback and bounce after a strong rally. 

Technical View

• Textbook pullback and bounce from previous resistance turned support. Short term momentum reversing from oversold.  
• Strong Technical Score (7 out of 10)
• Bullish 1M and 6M trends.

Fundamental View

• Strong growth in booking trends. Expected to reach 2019 levels in Q1 2022. 
• Strong diversification globally. EXPE is well protected from regional COVID lockdowns or disruptions.
• Earnings: Feb 10, 2022 (84 days)

As this is a debit spread, look to take profits at 75% – 100% gain and cut losses at 50%:

• Take Profits: $11.55 – $13.20 Credit
• Stop Loss: $3.30 Credit

View EXPE Trade

View Closing Trades

Closing Trades

• TLT – 45% Gain: Short Dec 10, 2021 147.5/152 Call Verticals @ $0.84 Debit

DailyPlay Positions Outlook:

After a very brief pullback, equities seem to have resumed their trend higher. We maintain our bullish outlook for the major indices for the rest of the year as seasonality and strong earnings provide tailwinds for equities to continue higher. We are taking this opportunity to take profits on our TLT trade as it is very close to being 21 days away from expiration and is oversold in the short term. By taking profits now, we avoid the risk of a potential retracement from oversold levels. 

Prakash Vijayanath
Analyst at OptionsPlay

View ROK Trade

Market Outlook:

Inflation numbers announced last week saw equities retreat after a multi-week rally. However, we view this slight pullback in the major indices as a positive as equities were near overbought territory and the pullback allows for better risk/reward long opportunities. However, higher than expected inflation numbers indicate that inflation may be more permanent than transitory as originally believed. This will likely lead to higher rates in the near future which will be a headwind for equities, especially higher beta unprofitable companies as investors flock to safer value names. Retail Sales numbers announced this week will provide a better idea of how much inflation is impacting the retail sector and will provide further evidence to what the Fed may do next regarding rates. Our outlook for equities remains positive due to the strong earnings season where 80% of the companies in the S&P 500 that have reported so far have beaten analysts’ estimates. 

ROK Bullish Trade Idea:
Our bullish trade idea today is Rockwell Automation Inc (ROK). ROK is part of the Industrials sector which has finally seen some momentum after breaking out to new all-time highs and pulling back. We view ROK as an attractive play on the Industrials sector which will benefit from Federal Infrastructure spending as well as commercial infrastructure spending as the reopening continues. ROK is also well-positioned to take advantage of the reshoring of US manufacturing coupled with the oncoming capex cycle. With a focus on automation and leveraging R&D in high growth areas, ROK’s medium to long term picture looks positive. From a technical perspective, ROK recently broke to new all time highs and recently pulled back to retest the $327 previous resistance and bounced higher with good momentum. Both 1M and 6M trends are bullish and with a technical score of 9 (out of 10), ROK is a very strong stock that will likely continue higher.

As this is a debit spread, look to take profits at 75%-100% gain and cut losses at 50%:

• Take Profit: $20.47 – $23.40 Credit
• Stop Loss: $5.85 Credit

View ROK Trade

View Closing Trades

Closing Trades

• DPZ – 47% Gain: Short Dec 17, 2021 460/490 Put Verticals @ $5.40 Debit

Adjustment Trade

C Trade Adjustment – 53% Unrealized Loss. Roll November 19, $73 Call to December 17, $72.5 Call to collect more premium:

• Buy to close November 19 $73 Call @ $0.08 Debit
• Sell to open December 17 $72.5 Call @ $0.82 Credit
• This results in a reduced cost basis for the C Call Diagonal Trade from $3.25 to $2.51. 

DailyPlay Positions Outlook:

After a 4 week run in the S&P 500 gaining more than 1% each week, equities have started to pullback slightly after high inflation numbers were released earlier this week. While our outlook remains bullish for equities due to strong technicals and fundamentals, the pullback from overbought conditions provides an opportunity for a better entry for the major indices. We are taking this opportunity to take profits on our DPZ bullish position to avoid weekend risk as it is very close to its TP price and we are also adjusting our C trade. The rolling of the short strike for C allows for a reduced cost basis for the overall trade 

Prakash Vijayanath
Analyst at OptionsPlay

View CCI Trade

The bullish DailyPlay for Wednesday, November 10th is Crown Castle International (CCI). CCI is part of the Real Estate sector that has experienced an 8.3% gain in the last month. 

Technical View

• Pullback to 21 D EMA and bounce is constructive for continuation higher.
• Improving Technical Score
• Bullish 1M trend.

Fundamental View

• Well positioned to leverage growing wireless network development spend
• Core leasing network expected to grow by 50% in 2022
• Earnings Jan 26, 2022 (76 days)

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

• Take Profits: $1.67 Debit
• Stop Loss: $7.70 Debit

View CCI Trade