DailyPlay – Opening Trade (BDX) – August 14, 2023

BDX Bullish Opening Trade Signal

View BDX Trade

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish

Details: Buy to Open 2 Contracts Dec 15th $285/$310 Calls Vertical Spreads @ $9.15 Debit per contract.

Total Risk: This trade has a max risk of $1,830 (2 Contracts x $915) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $915 to select the # shares for your portfolio.

Trend Continuation Signal: This stock is bullish and is expected to continue this trend.

1M/6M Trends: Bullish/Bullish

Technical Score: 9/10

OptionsPlay Score: 105

Stop Loss: @ $4.60 Credit (50% loss).

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 Friday’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

As the global economy slows and contagion risks rise out of China, one sector that provides defense is Healthcare, especially with an aging global population. We have recently seen Healthcare start outperforming as a sector and seek opportunities to play for a breakout. Becton Dickinson is not a household name but is a medical conglomerate providing medical devices and instruments in over 60 countries. Its double digit EPS growth and 25% margins, coupled with a 20x forward earnings provides an attractive valuation for a business that has consistently executed on high growth over the past 3 years. BDX recently broke out from its $270 resistance level on earnings and recently retested as support providing a strong risk/reward entry for further upside. I’m looking to buy a Dec $285/$310 Call Vertical @ $9.15 Debit. With a hypothetical portfolio of $100,000 I recommend adding another 2% of risk on this trade, which is 2 Contracts for $1,830 of risk. We will set a stop loss on the spread at 50% of the premium paid, $4.60 Credit. 

BDX – Daily