DailyPlay – Opening Trade (TLT) – August 3, 2022

Bearish Opening Trade Signal

View TLT Trade

Strategy Details

Strategy: Long Put Vertical Spread

Direction: Bearish

Details: Buy to Open 12 Contracts Aug 26, 2022 $118.50/$114.50 Put Verticals @ $1.72 Debit.

Total Risk: This trade has a max risk of $2,064 (12 Contracts x $172 per contract).

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

1M/6M Trends: Bullish/Neutral

Technical Score: 4/10

OptionsPlay Score: 107

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 that this is a CONDITIONAL TRADE. See the Condition below. The strike prices, premiums, and OptionsPlay Score will therefore be slightly different when the condition is met, and we enter this trade.

Investment Rationale

I’ve recently been telling you that the TLT needs to get Friday closes above $119.42 to potentially create a bigger breakout to $130+. But yesterday’s multiple Fed governor statements that the Fed is “not” done raising rates – something I’ve been saying since last week – along with the UST 10yr. bouncing on the weekly Base Line at 2.58% (to yesterday’s close at 2.74%), makes me think that rates will actually head towards 3% in the near term.  If so, we will look to fade the 6-week-long TLT rally.

THE CONDITIONAL TRADE: IF the TLT trades (anytime today or during the rest of this week) up to $118.50 to $119.00, we’ll then look to buy an August 26^th $118.50/$114.50 put vertical at the then current mid-price of the spread, playing for the TLT to lose value to break its uptrend line and sell down into the $114 area.

TLT – Daily