DailyPlay – Opening Trade (SPY) – September 5, 2024

SPY Bearish Opening Trade Signal

Investment Rationale

As we head into this week’s payrolls data on Friday morning, there are signs that we could get another negative surprise, similiar to July’s numbers. JOLTs data this week came in weaker than expected and the Fed’s Survey for Aug shows a contraction in both manufacturing and services payrolls. The markets have been very sensitive and have reacted very strongly to poor jobs numbers and I believe it is worth while to put on a small hedge against further volatility at the end of this week with a put hedge on SPY.

Buy Sept $547/530 Put Vertical @ $3.85 Debit, this would risk less than 1% of the ETF’s value to hedge against some short term volatility that could materialize on Friday. 

SPY – Daily

Trade Details

Strategy Details

Strategy: Long Put Vertical Spread

Direction: Bearish Debit Spread

Details: Buy to Open 5 SPY Sept 20th $547/$530 Put Vertical Spreads $3.85 Debit per Contract.

Total Risk: This trade has a max risk of $1,925 (5 Contracts x $385) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $385 to select the # contracts for your portfolio.

Counter Trend Signal: This is a bearish trade on a stock that is expected to pull back to lower levels.

1M/6M Trends: Bullish/Bullish

Relative Strength: 7/10

OptionsPlay Score: 138

Stop Loss: @ $1.93 Credit (50% loss of premium)

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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. 

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