DailyPlay – Opening Trade (SRE) – September 23, 2022

SRE Bearish Opening Trade

View SRE Trade

Strategy Details

Strategy: Long Put Vertical Spread

Direction: Bearish

Details: Buy to Open 5 Contracts Oct. 21st $165/$145 Put Vertical Spreads @ $4.40 Debit.

Total Risk: This trade has a max risk of $2,200 (5 Contracts x $440).

Trend Continuation Signal: This is a Bearish trade on a stock that is experiencing a mildly bearish trend. 

1M/6M Trends: Mildly Bearish/ Bullish

Technical Score: 9/10

OptionsPlay Score: 111

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

Stocks continue to tumble, as professional money managers – who know the implication of the broken weekly cloud – are heeding its signal. I remain a seller of rallies, and we might even get one next week with yesterday marking both daily Aggressive Sequential and Combo -13 signals, and today likely becoming a Setup -9 count, too. Given rather poor bullish sentiment on top of this, we could see some price pop in the coming days. (However, I believe it will be an ephemeral one.)

SPX – Daily

I’m looking for names to sell, and I found one that has upside exhaustion signals and is a heck of a lot closer to its 2022 high than most you’ll find. It’s Sempra Energy (SRE). As it marked a weekly +13/+9 last week, and looks like it could head decently lower relative to the upside risk of about $15, we’ll look to get long SRE Oct. 21st $165/$145 put spreads for what closed yesterday at $4.40 mid. That’s only 22% of the strike differential with the chance to make as much as $15.60, or about 3.5x our premium paid.

SRE – Weekly