Taking Partial Profits

• CLF – 51% Gain: Short Mar 18, 2022 14/16 Put Verticals​ @ $0.35 Debit. Close half of this position. For example, if 10 contracts were opened for this trade, we recommend closing 5 contracts. 

DailyPlay Positions Outlook

Equities reversed lower today after recovering earlier this week. SPY declined 2.35% and is now back below a key $453 area which may indicate that further downside is expected with additional support at $428. With the Non-Farm Payrolls announcement this morning,  volatility can be expected at the open so we take this opportunity to take partial profits on the CLF trade by closing half the position. 

We maintain our bullish outlook for CLF, but price has reached a key area at $19 and the CLF Put Credit Spread is at a 51% profit. By closing half the positon, we are locking in partial profits while still maintaining upside exposure in CLF. 

XLE – 9% Gain: Feb 18, 2022/Jun 17, 2022 55/59 Call Diagonals​ @ $3.95 Credit

DailyPlay Positions Outlook:

As equities continue to recover this week, both the SPY and QQQ managed to break above key resistance levels at $453 and $353 respectively. A disappointing Meta earnings announcement has seen some risk aversion with the dollar index inching higher and moving back above the 21 D EMA. We take this opportunity to close out the XLE call diagonal trade for a limited profit after XLE rallied above the short $59 strike which limits further gains. 

View TGT Trade

TGT Bullish Opening Trade Signal

Strategy Details

Strategy: Call Debit Spread

Strategy Direction: Bullish

Details: Buy March 4, 2022 $220/$235 Call Vertical @ $5.04 Debit Limit Order

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

1M/6M Trends: Bearish/Bearish

Technical Score: 4/10

OptionsPlay Score: 109

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.

Exiting the Trade

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

Take Profits: $8.82 – $10.08 Credit

Stop Loss: $2.52 Credit

Taking Profits

• FANG: 46% Gain: Buy to close FANG Feb 18, 2022 $110/$125 Put Verticals @ $3.15 Debit

FDX Adjustment

For today’s DailyPlay, are adjusting our open FDX position. This position was opened on December 28th, 2021 as a Call Diagonal trade. The short leg for this trade has since expired worthless which means that the cost basis of the long April $250 strike has reduced from $18.85 to $16.42. As the short leg has expired, we will be selling another OTM call to further offset the overall cost and breakeven of the bullish FDX position:

• Sell to open Feb 25, 2022 $270 Call

Please note that this is not an open signal for the FDX Call Diagonal Trade, this signal should only be used if you are already in the FDX trade that was opened on December 28th, 2021.

View MRK Trade

MRK Bullish Trade Idea:
Our bullish trade idea for today is Merck & Co Inc (MRK). In recent months, MRK has formed a double bottom near the $72.50 area and has rebounded with strong momentum. Price has now broken above the $78.50 resistance level and both 1M and 6M trends are now bullish. With an earnings announcement scheduled for Feb 3rd, MRK’s strong relative strength against the market and sector heading into this announcement is an encouraging sign for a continuation of its rally.  

Please note that this is an earnings play and high volatility is expected after the earnings announcement. 

Closing Trades

• CSCO – 79% Loss: Long Mar 18, 2022 $60/$67.5 Call Vertical @ $0.61 Debit

DailyPlay Positions Outlook

Another red day for the major indices saw SPY and QQQ lose out on their pre-market gains as equities struggle to find momentum after Mondays bounce higher. SPY is managing to hold the $428 support level which is encouraging, but high volatility and hawkish comments made by the Fed are adding pressure. QQQ remains on the backfoot as price retested and failed at the $353 key level. Rotation out of growth is the key theme in equities. We take this opportunity to close out the CSCO trade as price failed to bounce higher from the $55 level yesterday. 

Prakash Vijayanath

Analyst at OptionsPlay

View CLF Trade

The bullish DailyPlay for Wednesday, January 26th is Cleveland-Cliffs Inc (CLF). While CLF is currently on a bearish trend, our thesis for our bullish DailyPlay is that CLF will likely rebound higher from current levels. 

Technical View

• Price has pulled back to the 38% Fibonacci level (based on 2016 secular low to highest high). 
• Reversal in short-term momentum indicates price is reacting positively to the $16 support level.

Fundamental View

• CLF is well-positioned in Iron Ore Pellets and Steel segments in North America with acquisitions of AM USA and AKS likely to provide strong EPS and FCF growth. 
• In 2021, CLF was successful in improving their balance sheet by playing down debt
• Earnings: Feb 11, 2022 (16 days)

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

• Take Profit: $0.35 Debit
• Stop Loss: $1.42 Debit

View C Trade

The bullish DailyPlay for Tuesday, January 25th is Citigroup Inc (C). C is part of the Financial sector that has experienced a strong pullback in recent days providing a good entry point. 

Please note this trade is a call diagonal trade which represents a longer-term bullish outlook. The aim for the short leg of the trade is to let it expire worthless or roll it closer to expiration for a minimal cost. This allows us to consistently receive income that offsets the premium paid for the long leg which eventually leads to a reduced cost basis and breakeven price.

Technical View

• Deep pullback after a strong rally in recent weeks provides a much better risk/reward bullish entry for long-term exposure. 
• Neutral Technical Score that is expected to improve
• Short-term momentum has approached oversold levels. This provides evidence that a rebound is likely. 

Fundamental View

• Positive outlook on the banking industry that will likely benefit from growing yields and increasingly hawkish Fed.
• Citigroup’s restructuring in exiting the consumer banking space in Mexico as well as the ongoing disposition in retail banking in the Asia Pacific region allows for a more streamlined model and releases equity capital to be deployed in other areas. 
• Earnings: Apr 14, 2022 (79 days)

MSFT Bullish Trade Idea:
Our bullish trade idea for today is Microsoft Corp (MSFT). Microsoft is part of the Technology sector that has underperformed the broader market in recent weeks, however, the thesis behind this bullish idea is reflected by MSFT’s strong balance sheet, high medium to long term growth expectations, as well as the upcoming earnings announcement providing a catalyst for a rebound after the recent decline in price. 

Please note that this is an earnings play and high volatility is expected after the earnings announcement. 

View MSFT Trade