Trade Alert: Buying The Dip

Bullish options bets on our current top name plus two other stocks.

The Risk Of Buying The Dip

If we’re heading into a bear market, buying the dip might not pan out. To try to skew the odds in our favor a bit, I’m looking for three different kinds of stocks:

• Portfolio Armor top names, particularly ones exhibiting our strongest factor (a measure of options market sentiment). In last night’s top ten names, only our number one name exhibited this factor.

• Under valued, oversold names. Today’s example of this category has a Chartmill overall valuation rating of 9 (out of 10), a Piotroski F-Score of 8 (out of 9), and a Relative Strength Index (RSI) of 26 (scores below 30 are generally considered oversold). My theory here is if their next earnings release is decent, the stock might catch a bounce.

• Oversold names that aren’t undervalued according to standard metrics, but the stocks are special. Today’s special name is Tesla (TSLA 0.00%↑).

Our maximum possible gains on these trades range from about 200% to 400%, and our maximum possible loss is 100% on all of them.

Details below.

Trade #1: Our Top Name

The stock is Futu Holdings (FUTU 0.00%↑), and our trade is a vertical spread expiring on March 14th, buying the $117 strike calls and selling the $119 strike calls, for a net debit of $0.50. The max gain on 8 contracts is $1,200, the max loss is $400, and the break even is with FUTU at $117.50. This trade filled at $0.50.

Trade #2: Undervalued And Oversold

The stock is American Eagle Outfitters (AEO 0.00%↑), and our trade is a vertical spread expiring on March 14th, buying the $13 strike calls and selling the $14 strike calls, for a net debit of $0.32. The max gain on 10 contracts is $680, the max loss is $320, and the break even is with AEO at $13.32. This trade hasn’t filled yet. This trade filled at $0.32 on 3/3/2025.

Trade #3 Oversold And Tesla

The stock again is Tesla (TSLA 0.00%↑), and our trade is a vertical spread expiring on January 16th, 2026, buying the $380 strike calls and selling the $390 strike calls, for a net debit of $2. The max gain on 2 contracts is $1,600, the max loss is $400, and the break even is with TSLA at $382. This trade filled at $2.

Exiting These Trades

Assuming all of these trades fill, I’m going to set GTC orders to exit at net credits of about 95% of the spread (so, for example, $0.95 for AEO and $9.50 for TSLA), and lower those prices, as necessary, as we approach expiration.