DailyPlay – Opening Trade (KRE) Closing Trade (HAL) – December 7, 2023

Closing Trade

• HAL – 72.96% Gain: Sell to Close 29 Contracts (or 100% of your Contracts) Jan 19th $38/$34 Put Vertical Spreads @ $2.36 Credit. DailyPlay Portfolio: By Closing all 29 Contracts, we will be receiving $6,844. We initially opened 16 Contracts on Nov 13 @ $1.22 Debit, and then another 13 Contracts on Nov 13 @ $1.53 Debit. Our average gain, therefore, is $100 per contract. 

KRE Bearish Opening Trade Signal

View KRE Trade

Strategy Details

Strategy: Short Call Vertical Spread

Direction: Bearish

Details: Sell to Open 10 Contracts Jan 19th $48/$51 Call Vertical Spreads @ $1.11 Credit per contract.

Total Risk: This trade has a max risk of $1,890 (10 Contracts x $189) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $189 to select the # contracts for your portfolio.

Counter Trend Signal: This is a bearish trade on a stock that is bullish and overbought and, therefore expected to pull back.

1M/6M Trends: Bullish/Bullish

Relative Strength: 9/10

OptionsPlay Score: 100

Stop Loss: @ $2.22 Debit. (100% loss on 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 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. 

Investment Rationale

Another ETF that is overbought is KRE, which recently formed a double top at $49. KRE has already shown signs of exhaustion as the last two days have seen a pullback developing. As we believe that KRE will not trade higher throughout this trade, we will use this opportunity to collect a premium by selling a Credit Spread. We will collect a premium of 37% over the width of this trade, which is an excellent risk/reward ratio.

We will look to Sell the Jan 19th $48/$51 Call Vertical @ $1.11 Credit. With a hypothetical portfolio of $100,000, I recommend risking 2% of the portfolio’s value to this trade, which is 10 Contracts for a risk of $1,890. We will set a stop loss on the put spread at around 100% of the premium received @ $2.22 Debit.

KRE – Daily