DailyPlay – Opening Trade (BDX) – July 20, 2022

Bullish Opening Trade Signal

View BDX Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 4 Contracts Aug 5, 2022 $237.5/$230 Put Verticals @ $2.70 Credit.

Total Risk: This trade has a max risk of $1,869 (3 Contracts x $623 per contract).

Counter Trend Signal: This trade has a max risk of $1,920 (4 Contracts x $480 per contract).

1M/6M Trends: Bearish/Bearish

Technical Score: 7/10

OptionsPlay Score: 89

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. 

Please note 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. This will be reflected in the Portfolio tab within the OptionsPlay platform.

Investment Rationale

JNJ had a break above the $150 level in early 2020, and ever since it traded in an upward channel. When

Yesterday’s rally was a big one, with the SPX up 2.75%, and the NDX up even more. Indeed, bulls are trying to make a stand, and along with my call on Monday to be near-term bullish, getting in Monday on what ended up being a down day gave us good entry for what happened yesterday. Will it continue? I think for now, yes. (But I still will keep it within the context of an ongoing bear, but one that presented a buying opportunity.)

I found a chart that looks like a good risk/reward idea to put on a bullish play, as it has continually shown support at a level that goes back 16 months and has been tested many times. Let’s look at Becton Dickenson (BDX), a health care name in a favored sector that I am substantially overweight in my In The Know Trader’s 7:11 report. It has played in and around the mid-$230s on all lows going back to March 2021.

BDX – Daily

With the daily Setup -9 count showing up on Monday in this same mid-$230s zone, let’s look to sell an August 5th $237.5/$230 put spread. (It’s mid prices closed on Tuesday at $2.70.) They report on August 4th, so we will only be holding this a short period, but it gives us a bit of extra premium because the expiration is the day after next their earnings release.  Barring a market meltdown, I’d think this will hold in here going into their quarterly numbers in 17 days.