DailyPlay – Opening Trade (NOC) Closing Trades (AAPL, JNJ) – February 5, 2024

Closing Trades

• AAPL – 50.70% Gain: Sell to Close 7 Contracts (or 100% of your Contracts) March 15th $190/$180 Put Vertical Spreads @ $4.31 Credit. DailyPlay Portfolio: By Closing all 7 Contracts, we will receive $30.17. We initially opened these 7 Contracts on Jan 30 @ $2.86 Debit. Our average gain, therefore, is $145 per contract. 
• JNJ – 55.28% Loss: Sell to Close 3 Contracts (or 100% of your Contracts) Feb 16th $155 Calls @ $2.75 Credit. DailyPlay Portfolio: By Closing all 3 Contracts, we will receive $825. We initially opened these 3 Contracts on Dec 15 @ $6.15 Debit. Our average loss, therefore, is $340 per contract. 

NOC Bullish Opening Trade Signal

Investment Rationale

As geopolitical tensions and the risk of a wider regional conflict in the Middle East rise, defense stocks have been lagging on the sidelines. Despite reporting better-than-expected earnings, investors sold NOC after earnings on the back of an uncertain outlook and guidance. With defense stocks trading closer to their 52-week lows, it presents an opportunity to potentially look for a bounce. 

Technical Analysis

For the past year, NOC has largely traded within a range from $430 to $480 and its recent earnings announcement triggered a slide to the lows. The stock has since bounced off those lows and starting to show strength and now looks to close the gap at $463 before potentially reaching the $480 top of the trading range. 

NOC – Daily

Fundamental Analysis

Currently, analysts are expecting about 6% EPS growth this year on the back of 5% revenue growth, which is very modest. However, this is reflected in the valuation at 18x forward earnings, NOC is inexpensive relative to itself and the market. With these types of valuations, the downside is limited and the upside remains sizable, especially given the propensity for defense stocks to outperform during periods of war. 

AMZN Trade Details

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish Debit Spread

Details: Buy to Open 3 Contracts March 22nd $450/$475 Call Vertical Spreads @ $7.67 Debit per contract.

Total Risk: This trade has a max risk of $2,301 (1 Contracts x $767) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $767 to select the # contracts for your portfolio.

Counter Trend Signal: This is a bullish trade on a stock that found support and is expected to bounce higher.

1M/6M Trends: Bearish/Bearish

Relative Strength: 4/10

OptionsPlay Score: 120

Stop Loss: @ $3.84 Credit. (50% loss of premium paid)

View NOC Trade

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 Wednesday’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. 

View NOC Trade