DailyPlay – Opening Trade (TLT) – December 13, 2023

TLT Bullish Opening Trade Signal

View TLT Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 11 Contracts Jan 19th $95/$92 Put Vertical Spreads @ $1.24 Credit per contract.

Total Risk: This trade has a max risk of $1,936 (11 Contracts x $176) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $176 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bullish trade on a stock that is expected to continue higher.

1M/6M Trends: Bullish/Mildly Bullish

Relative Strength: 4/10

OptionsPlay Score: 100

Stop Loss: @ $2.48 Debit. (100% loss on premium received)

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

Our DailyPlay for today is a bullish position on the Ishares 20+ Year Treasury Bond ETF – $TLT. In recent weeks, there has been a strong shift in sentiment as price rebounded from the $83 level with a significant uptick in momentum. After a minor pullback last week, the risk/reward favors the upside with the next resistance level at $100. As $TLT has a inverse correlation to yields, with yields moving lower, we believe there is upside potential in TLT in the short term. However, we will be monitoring Jerome Powell’s speech for any clues regarding the trajectory of interest rate cuts next year in order to maintain our bullish thesis on this ETF. 

We will look to Sell the Jan 19th $95/$92 Put Vertical Spread @ $1.24 Credit. With a hypothetical portfolio of $100,000, we recommend risking 2% of the portfolio’s value to this trade, which is 11 Contracts for a risk of $1,936. We will set a stop loss on the spread at around 100% loss to the value of the premium received @ $2.48 Debit.

TLT – Daily