DailyPlay – Opening Trade (TXN) – September 13, 2023

TXN Bearish Opening Trade Signal

View TXN Trade

Strategy Details

Strategy: Long Put Vertical Spread

Direction: Bearish

Details: Buy to Open 5 Contracts Oct 20th $165/150 Put Vertical Spread @ $4.08 Debit per contract.

Total Risk: This trade has a max risk of $2,040 (5 Contracts x $408) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $408 to select the # shares for your portfolio.

Trend Continuation Signal: This stock is bearish and expected to break below support.r.

1M/6M Trends: Bearish/Bearish

Technical Score: 8/10

OptionsPlay Score: 126

Stop Loss: @ $2.04 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 Tuesday’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

With housing data out of China continuing to erode, sentiment in the US equity markets are declining alongside. We are heading into today’s huge CPI print, with downside risk that inflation comes in hotter than expected. Oil and grains are examples where prices have surged in the past month and could contribute to an inflation uptick. Reviewing our DailyPlay portfolio, one position has recently confirmed our views, TXN has broken below its $165-170 trading range. I’m going to add to this position by taking the premiums that I’ve collected from the Call Vertical that we sold to buy some downside exposure. Buy Oct $165/$150 Put Vertical @ $4.08 Debit. With a hypothetical portfolio of $100,000, I recommend adding another 2% of the portfolio’s value to this trade, which is 5 Contracts for a risk of $2,040. We will set a stop loss on the put spread at 50% of the premium paid @ $2.04 Credit.

TXN – Daily