View TAN Trade

The bullish DailyPlay for Thursday, November 4th is the Invesco Solar ETF (TAN). TAN’s top 10 holdings are a variety of solar-based technology companies that offer broad-based exposure to the solar industry. 

Technical View

• Strong breakout of the $93 previous resistance level. Price has pulled back and bounced higher from this level. 
• Very Strong Technical Score (10 out of 10).
• Bullish 1M and 6M trends.

Fundamental View

• Strong MSCI ESG rating.
• The majority of TAN’s holdings are currently undervalued. 
• Broad-based exposure allows for lower volatility during earnings season

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

• Take Profits: $10.68 – $12.20 Credit
• Stop Loss: $3.05 Credit

View TAN Trade

Taking Profits

We expect some market volatility today with the Fed concluding their 2-day meeting which will likely highlight a tapering in monetary policy and the plan for rate hikes in 2022. While markets have priced in at least 1 rate hike for 2022, the downside risk for equities is if the Fed indicates more than just 1 rate hike. 

• FB – 34% Gain: Short Nov 19, 2021 $300/$322.5 Call Vertical​  @ $5.11 Debit

View TLT Trade

The bearish DailyPlay for Wednesday, November 3rd is the 20+ Year Treasury Bond ETF (TLT). TLT has experienced a 1.46% gain in the last month.

Technical View

• Price rallied back above the $146 resistance level but poor momentum indicates downside. 
• Declining technical score (6 out of 10)
• Price rejecting 100 D MA.

Fundamental View

• Very high probability of monetary tapering to be confirmed by the Fed.  
• Several participants preferred raising interest rates faster than market anticipated timelines
• Inflation metrics continue to outpace initial forecasts. 

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

• Take Profit: $0.77 Debit
• Stop Loss: $3.06 Debit

View TLT Trade

View Closing Trades

Closing Trades

• WFC – 48% Gain: Short Nov 26, 2021 47/50 Put Verticals @ $0.55 Debit

DailyPlay Positions Outlook:

Equities continue their charge higher with SPY and QQQ both touching all-time highs yesterday once again. We notice a slight narrowing in leadership compared to recent weeks. While this is no cause for concern yet, continued narrowing leadership does pose more downside risks. We are taking this opportunity to take profits on our WFC bullish position as it has reached our take profit level after breaking out of resistance. 

Prakash Vijayanath
Analyst at OptionsPlay

View DPZ Trade

Market Outlook:
After a big week for big tech with regards to earnings, the major equity indices ended the week at new all time highs. AAPL and AMZN disappointed on earnings after the bell on Thursday causing both SPY and QQQ to open lower, but strong momentum carried the indices 0.2% and 0.5% higher respectively. The next major event will be the Fed’s 2 day meeting this Tuesday – Wednesday which is expected to cause some volatility as markets prepare for a tapering of monetary policy. Sector rotation remains relatively healthy and indicates broad market participation. Rotation into Discretionary remains strong with Healthcare, Tech, and Real Estate also providing leadership. Sectors to avoid are Communications and Staples, both of which are showing weak momentum and relative strength.

DPZ Bullish Trade Idea:
Our bullish trade idea today is Dominos Pizza Inc (DPZ). DPZ is part of the Consumer Discretionary sector which is the strongest sector currently and is outperforming on strong momentum and relative strength against the market. Price recently rallied to a minor resistance level at $489 and strong momentum on both the weekly and daily timeframes indicates that this level will be broken. From a fundamental perspective, DPZ has been successful in utilizing its digital assets to gain market share in international markets. 

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

• Take Profit: $5.10 Debit
• Stop Loss: $20.40 Debit

View DPZ Trade

Closing Trade

• AAPL– 6% Loss: Short Nov 19, 2021 149/155 Call Vertical @ $2.20 Debit

Despite AAPL’s initial gap down on Friday’s open, price rallied intraday with strong momentum. Our bearish thesis for Apple’s earnings play was based on supply-side constraints and deceleration in services revenue which was confirmed during the announcement. However, bullish price action after the gap lower on Friday has invalidated our thesis and we take this opportunity to close out AAPL for a limited loss. 

Prakash Vijayanath
Analyst at OptionsPlay

Adjustment Trade

C Trade Adjustment – 29% Unrealized Loss. Roll October 29, $72 Call to November 19, $73 Call to collect more premium:

• Buy to close October 29 $72 Call @ $0.04 Debit
• Sell to open November 19 $73 Call @ $0.66 Credit
• This results in a reduced cost basis for the C Call Diagonal Trade from $3.81 to $3.25. 

DailyPlay Positions Outlook:

The short leg of the C diagonal spread will expire today and we continue to offset the trade cost of the long C call option by selling an OTM call to reduce the cost basis of the C Dec 17 $70 Call and collect more premium. This results in a new cost basis of $3.25 for the C diagonal trade. 

As a volatile earnings week comes to a close with most of the “Big Tech” names reporting a mixed bag of earnings, the major indices continue to grind higher. However, disappointing outlooks for AMZN and AAPL’s earnings yesterday after the bell will likely result in SPY and QQQ opening lower with some volatility expected this morning. 

Prakash Vijayanath
Analyst

View PDD Trade

The bearish DailyPlay for Thursday, October 28th is Pinduoduo Inc (PDD). PDD’s exposure to Chinese markets continues to weigh on performance. 

Technical View

• Failed retest at 100 D EMA and strong decline. 
• Bearish 1M and 6M trends
• Very weak technical score – 2 out of 10

Fundamental View

• Increased regulation in China poses a risk for growth 
• High exposure to Chinese markets. Demand is expected to be negatively impacted.
• Earnings Nov 24 

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

• Take Profit: $1.95 Debit
• Stop Loss: $7.80 Debit

View PDD Trade

View Closing Trades

Closing Trades

• LUV – 80% Loss: Long Dec 17, 2021 52.5/60 Call Vertical @ $0.40 Credit

DailyPlay Positions Outlook:

The major indices suffered losses during the last hour of trading yesterday which saw SPY declining towards the $450 support and QQQ once again rejecting all-time highs at $382 to end the day at $380. Big Tech earnings is set to continue this week and will provide direction in the short term for equities as we have Apple and Amazon both reporting at the end of the day. 

We take this opportunity to close out LUV for an 80% loss. LUV invalidated our bullish thesis yesterday after breaking below the $47 support level.

Prakash Vijayanath
Analyst at OptionsPlay

View Closing Trades

Closing Trades

• PTON – 29% Gain: Long Dec 17, 2021 80/85/105 Call Spread Risk Reversal @ $5.50 Credit
• KWEB – 16% Loss: Long Dec 17, 2021 50/58 Call Verticals @ $2.45 Credit
• AMAT – 90% Loss: Short Nov 5, 2021 130/140 Put Verticals @ $6.53 Debit

DailyPlay Positions Outlook:

As earnings season continues, equities remain elevated with what has been a surprisingly positive Q3 for the majority of companies in the S&P 500 so far. The tech giants are set to provide an additional boost for the major indices with Alphabet and Microsoft both posting encouraging numbers. SPY and QQQ continue to grind higher with SPY pulling back slightly from session highs yesterday and the Nasdaq 100 inching closer to its previous all-time high. 

We take this opportunity to close out PTON for a 29% gain before earnings next week. KWEB failed to breakout thus invalidating our bullish thesis and will be closed for a limited loss. AMAT failed to breakout higher as well and price action remains rangebound.