DailyPlay – Opening Trade (BSX) – March 15, 2023

BSX Bullish Opening Trade Signal

View BSX Trade

Strategy Details

Strategy: Long Call

Direction: Bullish

Details: Buy to Open 12 Contracts April 21st $48 Call @ $1.70 Debit per contract.

Total Risk: This trade has a max risk of $2,040 (12 Contracts x $170) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $170 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bullish stock that is expected to continue its uptrend.

1M/6M Trends: Bullish/Bullish

Technical Score: 9/10

OptionsPlay Score: 82

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

The SPX rose 1.7% on Tuesday as investors got an inline CPI number that created more comfort that the Fed may actually pause their rate hikes next week, while also getting a sense that the banking issue that hit the markets last week is subsiding. Badly beaten-down regional banks made substantial gains yesterday, recouping significant losses seen over the past few days. Using the weekly SPX chart, the trading range from the bullish and bearish Propulsion Momentum levels continue to be evident, and remains so barring a Friday close this week beneath last week’s close of 3862.

Yesterday we added to our morning Daily Play when I put out a midday update to exit a trim/exit a few more ideas we had on that moved enough to act on, given their proximity to expiration. We were also able to buy the TLT recommendation I put out yesterday morning, as it pulled back into the $104.50/$104 zone I was willing to get long a $104.5/$114 April 6th call spread. We got filled near $2.20.

For today, I see an idea to enter in a long call spread on a S&P 500 stock that is a hair shy from its all-time high. (Obviously, we don’t come across too many SPX names making that statement.) The name is Boston Scientific (BSX), and its chart suggests that a surge higher is likely coming, as price has repeatedly bottom over the past 4-6 weeks on the same level that stood as an almost 20-year resistance level, and more recently as a 3-year resistance level.

BSX – Weekly

The next major catalyst is its earnings report in late-April, but given no seller has ever made money being a seller (as compared to a long-term holder), I’d look to buy a bullish call spread. The best way to play this, in my view, is to simply buy the April 21st $48 call for what yesterday closed at $1.70 mid (Selling the $55 call against it only yields a nickel, and there’s no strikes in between the $150 and $155.) So, this is basically a bet that the stock will close above $49.70 by then, and that’s only $1.40 (or 2.8%) above yesterday’s close. I think that’s reasonable.