DailyPlay – Opening Trade (BIDU) – September 1, 2023

BIDU Bullish Opening Trade Signal

View BIDU Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 3 Contracts Oct 13th $144/$134 Put Vertical Spreads @ $4.25 Credit per contract.

Total Risk: This trade has a max risk of $1,725 (3 Contracts x $575) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $575 to select the # shares for your portfolio.

Trend Continuation Signal: This stock is bullish and expected to make new highs.

1M/6M Trends: Bullish/Bullish

Technical Score: 4/10

OptionsPlay Score: 94

Stop Loss: @ $8.00 Debit (100% 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 the previous day’s closing price and we’re estimating that it will likely fill around $3.80 at the open.

Investment Rationale

As data out of China continues to stagnate, and the government rolls out stimulus across a wide swath of the economy, there may be contrarian opportunities in this market. The Chinese government just approved the first AI Chatbot for public consumption, and BIDU looks like an interesting setup. BIDU has spent the last nearly 2 years forming a bottoming inverse head & shoulders formation that has a neckline of $160, which would be an immediate upside target. With a breakout potential into the $220’s. While I don’t think we’re ready to get ahead of ourselves, I think now is a low-risk opportunity to acquire a small position in BIDU and see if an AI lead rally will materialize. I’m looking to sell the Oct 13 $144/$134 Put Vertical @ $4.25 Credit (I expect that this will likely trade around $3.80 at the open since BIDU is already up about 1% pre-market). With a hypothetical portfolio of $100,000, I recommend risking 2% of the portfolio’s value on this trade, which is 3 Contracts for a risk of $1,725. We will set a stop loss on the spread at 100% of the premium collected, $8.00 Debit.

BIDU – Daily