DailyPlay – Rolling Trade (ORCL) – January 24, 2024

DailyPlay Update – Roll ORCL

Our ORCL Feb 16 $105/$120 call vertical is currently up 132.9%. This provides us with an opportunity to roll this trade. By rolling this debit spread, we can use the proceeds from this trade to fund a new ORCL trade at minimal cost. Rolling simply involves 2 steps:

1. Closing the current trade for a 132.9% gain. This provides us with a profit of $4.16 (per share) for this trade (current market price $7.29 – cost basis of $3.13)
2. Opening a new ORCL trade with the trade details below. The original cost basis for the new ORCL position is $4.17. By using the profit from the original trade of $4.16, the resulting cost basis is $0.01. This means that we can gain further upside exposure in ORCL for a risk of only $0.01 per share (essentially a free debit spread)

Closing Trade

• ORCL – 132.91% Gain: Sell to Close 7 Contracts (or 100% of your Contracts) Feb 16th $105/$120 Call Vertical Spreads @ $7.29 Credit. DailyPlay Portfolio: By Closing all 7 Contracts, we will be receiving $5,103. We initially opened these 7 Contracts on Dec 18 @ $3.13 Debit. Our average gain is $416 per contract. 

ORCL Opening Trade Signal

View ORCL Trade

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish Debit Spread

Details: Buy to Open 7 Contracts Mar 15th $110/$120 Call Vertical Spreads @ $4.17 Debit per contract. By using the proceeds from the closing trade of $4.16, the actual cost basis is now $0.01 per contract. 

Total Risk: This trade has a max risk of $7 (7 Contracts x $1).

Trend Continuation Signal: This is a rolling trade on a stock that is currently experiencing a bullish trend.

1M/6M Trends: Bullish/Bullish

Relative Strength: 5/10

OptionsPlay Score: 250

Stop Loss: There is no stop loss for this trade as it is essentially a free debit spread with a total risk of $1.00 per contract.

Entering the Trade

Please note – As this is a rolling trade and we have already made a profit of $4.16 on the previous ORCL trade, the actual cost basis is $0.01 as we are using the profit from the first ORCL trade to fund the new ORCL debit spread. 

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 the previous day’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 Semiconductor optimism has overshadowed earnings season so far with both the Nasdaq 100 and S&P 500 rallying further into all-time high territory. Rotation into the technology sector has been strong since Friday and has shifted market sentiment to “risk-on” despite the US 10-year yield moving higher. Fed futures are now only pricing in a 50% probability that the Fed will cut interest rates by 25 points in the March meeting, compared to the 75% probability one month ago. This may provide a headwind leading to the March Fed meeting but the short-term rally in the Technology Sector provides an opportunity to maximize our current open positions in the DailyPlay portfolio.

We will look to roll our existing ORCL Feb 16 $105/$120 Call Vertical up and out to the Mar 15 $110/$120 Call Vertical. By using the $4.16 net profit per contract on the original ORCL position to offset the cost basis of the new ORCL position on $4.17, the resulting net cost basis is now $0.01 per contract, which essentially provides us with a free debit spread to gain further upside with little to no risk should ORCL decline.

ORCL – Daily