DailyPlay – Opening Trade (TXN) – September 26, 2023

TXN Bearish Opening Trade Signal

View TXN Trade

Strategy Details

Strategy: Long Put Vertical Spread

Direction: Bearish

Details: Buy to Open 4 Contracts Oct 20th $165/$150 Put Vertical Spreads @ $5.02 Debit per contract.

Total Risk: This trade has a max risk of $2,008 (4 Contracts x $502) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $502 to select the # shares for your portfolio.

Trend Continuation Signal: This is a bearish trade on a stock that broke below an area of support.

1M/6M Trends: Bearish/Bearish

Technical Score: 3/10

OptionsPlay Score: 130

Stop Loss: @ $2.50 Credit (50% 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 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 10-year yields continue to climb to decade highs, stocks with rich valuations are at the highest risk of a pullback as equities weaken. One of our positions TXN has now broken below it major support level of $160 and at risk of reversing lower toward its $144 52-week lows. We are going to take this opportunity now to add further exposure to the TXN position. We have already taken profits on our initial position and currently own the Oct $165/$150 Put Vertical and suggest that we add another 2% of our portfolio risk to this position. With a hypothetical portfolio of $100,000, 2% of the portfolio’s value would equate to 4 more Contracts. We will set a stop loss on the put spread at 50% of the premium paid @ $2.50 Credit.