Trade Alert: A Contrarian Top Name

Taking advantage of today's downturn.

Feb 21, 2025

A professional and elegant Chinese woman in a modern office setting, analyzing stock market data on her laptop. The perspective is rotated so that we clearly see the financial chart displayed on her screen, which features stock trends, candlestick patterns, and market indicators. A golden Chinese Lucky Cat (Maneki Neko) sits on her desk, facing both the woman and the viewer, raising its paw for good fortune. The background subtly integrates financial market elements, reinforcing the theme of investment and prosperity. The image is in a rectangular format (1792x1024) with a well-balanced and sophisticated composition.

In a rush, so using a pic I made for a post about a Chinese stock

Buying The Dip

We’ve got some bad economic news today, and the company we’re betting on had bad news of its own this week.

One strategy that’s had some success for us in the past, is placing bullish options trades on Portfolio Armor’s top names after a market dip. That’s what we’re doing today.

In addition to being one of our top ten names last night, today’s stock currently has a valuation rating of 9 according to Chartmill—offhand, I’m not sure if I’ve seen that before, but it’s certainly rare. Our top names tend not to be cheap.

We’ve got two trades on this one today:

A short term, speculative trade expiring at the end of next week. The maximum upside on this one is uncapped, and the maximum loss is 100%.
A medium term trade expiring after its next earnings report in April. The max upside on this one is about 220%, and the max loss is 100%.

Details below.

Today’s Short Term, Speculative Trade

The stock is Delta Air Lines (DAL 0.00%↑), the company whose lady pilot landed a plane upside down in Toronto this week, and our short term, speculative trade is buying the $61 strike calls expiring on February 28th for $1.70. The max gain on 2 contracts is uncapped, the max loss is $340, and the break even is with DAL at $61.70. This trade filled at $1.70, but you may be able to get it for less now.

Today’s Medium Term Trade

Delta again, and our trade is a vertical spread expiring on April 17th, buying the $65 strike calls and selling the $67.50 strike calls, for a net debit of $0.77. The max gain on 4 contracts is $692, the max loss is $308, and the break even is with DAL at $65.77. This trade filled at $0.77, but you may be able to get it for less.

Exiting These Trades

For the first one, I’ll set a GTC limit order to exit one contract at $2.40, and try to exit both of them before the end of next week, ideally for more than what I paid for them. For the second trade, I’ll set a GTC limit order to exit at about $2.35, and lower that price, if necessary, as we approach expiration.