DailyPlay – Opening Trade (DXCM) – December 27, 2023

DXCM Bullish Opening Trade Signal

View DXCM Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 3 Contracts Feb 16th $120/$110 Put Vertical Spreads @ $3.30 Credit per contract.

Total Risk: This trade has a max risk of $2,010 (3 Contracts x $670) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $670 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bullish trade on a stock that is currently bullish but has recently pulled back to provide an entry.

1M/6M Trends: Bullish/Bullish

Relative Strength: 7/10

OptionsPlay Score: 90

Stop Loss: @ $6.60 Debit. (100% loss to the value of premium received)

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that whenever there is a multi-leg option strategy, it should be entered as a single trade. 

Please note that these prices are based on Tuesday’s closing prices. Should the underlying move significantly during the pre-market hours, we will likely adjust the strikes and prices to reflect a more accurate trade entry. 

Investment Rationale

The week before the new year tends to be quiet as there is a lack of fundamental catalysts to provide volatility. However, we have seen equities moving higher after a short-term pullback with the S&P just shy of all-time highs and the Nasdaq-100 now trading at all-time highs. With yields continuing to decline, equities continue to take advantage of the tailwind in the current risk-on environment. This provides bullish opportunities heading into the new year as momentum remains strong. 

We will look to Sell the Feb 16th $120/$110 Put Vertical @ $3.30 Credit. With a hypothetical portfolio of $100,000, we recommend risking 2% of the portfolio’s value to this trade, which is 3 Contracts for a risk of $2,010. We will set a stop loss on the put spread at around 100% loss to the value of the premium received @ $6.60 Debit. 

DXCM – Daily