DailyPlay – Conditional Opening Trade (TLT) – September 29, 2022

TLT Bullish Conditional Opening Trade

View TLT Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 6 Contracts Oct. 14th $102/$98 Put Vertical Spreads @ $0.86 Credit.

Total Risk: This trade has a max risk of $1,884 (6 Contracts x $314).

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

1M/6M Trends: Bearish/ Bearish

Technical Score: 5/10

OptionsPlay Score: 95

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. The condition that has to be met, before you enter this bullish trade is if we see a pullback to between $102.50 and $101.50. Therefore, the credit received for this trade will be different than what we are showing here, which is only acting as a guideline. 

Investment Rationale

Stocks lifted off from a full test of the June lows, with the SPX crossing back above 3700 on a day that also got some relief from bond yields substantially pulling back. There is good reason to believe that bond rates have hit an important short-term high, and as such, stocks may still see a lift (as I mentioned we’d likely see this week from last week’s weekly QQQ -13 signal).

I don’t think that the SPX would get much above what is now a properly broken weekly TDST line at 3819, so let the bulls have their fun for a few days, and then we’ll look to lean into the rally again. But in the meantime – seeing yesterday’s solid bond yields’ reversal session – we’re going to look to enter a bullish TLT trade if we see a pullback to between $102.50 and $101.50. So, if we see this price decline to our target zone today or tomorrow, we will then look to sell a short-dated TLT October 14th $102/$98 put spread at the then current mid-price. (For reference – but nothing more than that – this spread closed at 84 cents yesterday.)

THIS IS A CONDITIONAL TRADE.

TLT – Daily