DailyPlay – Opening Trade (HAL) – November 13, 2023

HAL Bearish Opening Trade Signal

View HAL Trade

Strategy Details

Strategy: Long Put Vertical Spread

Direction: Bearish

Details: Buy to Open 16 Contracts Jan 19th $38/$34 Put Vertical Spreads @ $1.22Debit per contract.ct.

Total Risk: This trade has a max risk of $1,952 (16 Contracts x $122) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $122 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bearish trade on a stock that is bearish and expected to continue lower.

1M/6M Trends: Bearish/Neutral

Relative Strength: 10/10

OptionsPlay Score: 131

Stop Loss: @ $0.61 Credit. (50% loss on premium paid)

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

An unexpected outcome of the war in Israel has been the decline in oil prices. This has put significant pressure on oil field services companies such as HAL and SLB as shale producers seek to manage budgets into the close of 2023, a huge turnaround from Q2. The energy sector has lost its relative strength faster than it gained it and stocks like HAL are at risk of pulling back and breaking below a key support level at $38. If HAL were to break below $38, the risk is a pullback into the $31 support area. I’m playing for a potential break with a simple put vertical. Look to buy the Jan $38/$34 Put Vertical @ $1.22 Debit. With a hypothetical portfolio of $100,000, I recommend risking 2% of the portfolio’s value to this trade, which is 16 Contracts for a risk of $1,952. We will set a stop loss on the put spread at around 50% of the premium paid @ $0.61 Credit.

HAL – Daily