DailyPlay – Opening Trade (HAL) – November 17, 2023

HAL Bearish Opening Trade Signal

View HAL Trade

Strategy Details

Strategy: Long Put Vertical Spread

Direction: Bearish

Details: Buy to Open 13 Contracts Jan 19th $38/$34 Put Vertical Spreads @ $1.53 Debit per contract.

Total Risk: This trade has a max risk of $1,989 (13 Contracts x $153 based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $153 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/Mildly Bearish

Relative Strength: 9/10

OptionsPlay Score: 119

Stop Loss: @ $0.77 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 Thursday’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

As we approach the end of the trading week, our $HAL position reflects an unrealized gain of 24%. With oil on the decline, the Energy sector has been the weakest sector in the S&P 500. $HAL broke below the $38 major support level yesterday which has confirmed our bearish thesis. As we expect a continuation lower, we will be adding another 2% to this position (Buy 13 Jan 19, $38/$34 Put Verticals @ $1.53 Debit). The next support zone for $HAL sits at $34.

Equities continue to push higher with the $SPX now at the $4500 level. Given the extent of the rally in the last 2 weeks, we view equities as slightly overbought in the short term and still expect a quick pullback in the next few days. However, the risk-on rally has seen a strong shift in price structure with a breakout above the $4400 previous swing high. Despite beating on revenue and EPS expectations, Walmart ($WMT) experienced a 8% decline yesterday due to poor forecasts regarding consumer spending.