DailyPlay – Opening Trade (ORCL) – December 18, 2023

ORCL Bullish Opening Trade Signal

View ORCL Trade

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish

Details: Buy to Open 7 Contracts Feb 16th $105/$120 Call Vertical Spreads @ $2.94 Debit per contract.

Total Risk: This trade has a max risk of $2,058 (7 Contracts x $294) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $294 to select the # contracts for your portfolio.

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

1M/6M Trends: Bearish/Bearish

Relative Strength: 2/10

OptionsPlay Score: 96

Stop Loss: @ $1.47 Credit. (50% loss on premium paid)

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 Friday’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

As we approach the end of 2023, equities have experienced a Santa Claus rally largely driven by a dovish Fed. Last week’s Fed meeting confirmed the Fed’s dovish stance and indicated that there could be 3 x 0.25% point cuts in store for 2024 as opposed to the 2 that was originally anticipated. Naturally, equities bounced higher on this news with the S&P and Nasdaq a stone throw away from all-time highs. We are also seeing a strong rotation back into tech stocks after a short-term retracement. Before things quiet down next week, there are still some key data releases – GDP (Thursday) and PCE price index figures (Friday).   

ORCL gapped down after earnings on December 11th, although earning was as expected. It then found support at $100 to form a double bottom at this point. Currently, ORCL is showing bullish price action and we therefore believe that it will bounce higher over the duration of this trade. The next resistance is at $115 and then $125.

We will look to Buy the Feb 16th $105/$120 Call Vertical @ $2.94 Debit. With a hypothetical portfolio of $100,000, we recommend risking 2% of the portfolio’s value to this trade, which is 7 Contracts for a risk of $2,058. We will set a stop loss on the put spread at around 50% loss of the premium paid @ $1.47 Credit.

ORCL – Daily