DailyPlay – Opening Trade (CAH) – June 8, 2023

CAH Bearish Opening Trade Signal

View CAH Trade

Strategy Details

Strategy: Long Put

Direction: Bearish

Details: Buy to Open 5 Contracts July 21st $82.50 Puts @ $2.20 Debit per contract.

Total Risk: This trade has a max risk of $1,100 (5 Contracts x $220) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $220 to select the # shares for your portfolio.

Counter Trend Signal: This stock has recently turned from bullish to neutral as it found resistance, while we expect to see a pullback from this level.

1M/6M Trends: Neutral/Bullish

Technical Score: 6/10

OptionsPlay Score: 80

Entering the Trade

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

Please note that these prices are based on Wednesday’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. 

Investment Rationale

Yesterday’s market saw both scenarios that we outlined earlier this week start to play out. Both overbought AI tech names saw a pullback and the broader market started to play catchup. The RSP chart is starting to poke out above the weekly cloud with the lagging line now inside the cloud. We will see if this strength can sustain through Friday’s close, if so, we have the foundations for a bullish trend and potentially continue to add to our RSP position. One trade that I want to revisit is our short position on CAH which was initiated a couple of weeks ago. We were able to take early profits with half the position, and now that CAH has rallied back to resistance and confirmed another rejection, I advocate that we add back another 1% of the portfolio’s capital on this trade for increased downside exposure. Buy to Open 5 Contracts July $82.50 Puts @ $2.20 Debit. 

CAH – Daily