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

View CHTR Trade

The bearish DailyPlay for Tuesday, November 9th is Charter Communications (CHTR). CHTR is part of the communications sector which is currently the weakest sector in the S&P 500. 

Technical View

• Strong bearish trend. Price broke below and retested $700 resistance providing a good bearish entry.
• Weak Technical Score (3 out of 10).
• Bearish 1M and 6M trends.

Fundamental View

• Lower broadband usage and 15% decrease in advertising revenue (vs -8.9% expected)
• Slowing EPS and revenue growth
• Earnings Jan 28 (80 days)

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

• Take Profits: $6.10 Debit
• Stop Loss: $24.40 Debit

View CHTR Trade

Closing Trades

• PDD– 53% Gain: Short Dec 3, 2021 93/104 Call Vertical @ $1.85 Debit

After some consolidation, PDD broke down lower towards the end of last week and managed to break below the $84 minor support level. This move meant that PDD reached our take profit level and with only 25 days to expiration, we take this opportunity to close this trade for a 53% profit. 

Prakash Vijayanath
Analyst at OptionsPlay

View MGM Trade

Market Outlook:

Equities ended the week on a positive note with SPY and QQQ reaching new all-time highs and pulling back slightly. For the first time this year, small caps started to show signs of participating in the rally experienced by the large-cap names with the Russell 2000 breaking out of a year-long consolidation range with strong momentum. This is very encouraging for equities and indicates broadening participation. The highlight of last week was the 2 day Fed meeting where equities reacted positively to the announcement on monetary tapering. The key events to watch this week will be further earnings announcements and inflation data which will provide some guidance as to what the Fed will do at their next meeting.

MGM Bullish Trade Idea:
Our bullish trade idea today is MGM Resorts International (MGM). MGM is part of the Consumer Discretionary sector which is the strongest sector currently and is providing leadership for the current equity rally. MGM’s technicals are very encouraging as it has been outperforming the Dow Jones Gambling Index for multiple months. Price has recently broken above its short-term consolidation range and with a strong recovery in Q3 EPS and Revenues, MGM’s technicals and fundamentals are aligning for a move higher. 

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

• Take Profit: $0.58 Debit
• Stop Loss: $2.34 Debit

View MGM Trade

Closing Trades 

• COST – 164% Loss: Short Nov 26, 2021 $455/$470 Call Vertical​  @ $14.80 Debit

View XPEV Trade

The bullish DailyPlay for Friday, November 5th is Xpeng Inc (XPEV). XPEV is part of the Consumer Discretionary sector which has provided strong leadership in recent weeks and has gained 16.20% in the last month. Please note that XPEV will report earnings later this month.  

Technical View

• Break above $45 resistance and consolidation provides a good bullish entry point. 
• Very strong technical score (10 out of 10)
• Bullish 1M and 6M trends

Fundamental View

• 233% YoY delivery growth reported in October  
• Expected to post the strongest growth among Chinese EV makers in Q4 due to model cycle. 
• Earnings November 23 (19 days). 

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

• Take Profit: $8.14 – $9.30 Credit
• Stop Loss: $2.32 Credit

View XPEV Trade