DailyPlay – Opening Trade (T) – May 19, 2022

View T Trade

Strategy Details

Strategy: Long Put Vertical Spread

Direction: Bearish

Details: Buy 56 Contracts June 10, 2022 $20/$18 Put Verticals @ $0.35 Debit.

Total Risk: This trade has a max risk of $1,960 (56 contracts x $35 per contract). 

Counter Trend Signal: This is a Bearish trade on a stock that is experiencing a Bullish trend. 

1M/6M Trends: Bullish/Bullish

Technical Score: 10/10

OptionsPlay Score: 118

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that if there is a multi-leg option strategy, it should be entered as a single trade. 

Investment Rationale

AXP has traded down to near the low $150s four additional times since basically starting a run higher Even with the market getting trashed as it has been, there are some names that are rallying. One of them is AT&T (T), which on Tuesday posted a daily Sequential +13 signal (i.e., potential upside exhaustion) right by a clear resistance line (at $20.75) and a prior broken uptrend test (the green dashed line). With yesterday’s market weakness, the stock sold down to $20.23, presenting us an opportunity to consider buying the June 10th $20/$18 put spread for $0.395 based upon yesterday’s closing mid prices. (That cost is about 20% of the strike differential.) The huge unfilled gap is staring at us, so I think that any further market drubbing will likely take this name down, too, and could — in a washout — go and fill the gap.