DailyPlay – Opening Trade (ABBV) – February 28, 2023

ABBV Bearish Opening Trade Signal

View ABBV Trade

Strategy Details

Strategy: Short Iron Condor

Direction: Bearish

Details: Sell to Open 5 Contracts Mar 17th $160/$165 Call $150/$145 Put Iron Condors @ $1.19 Credit per contract.

Total Risk: This trade has a max risk of $1,905 (5 Contracts x $381).

Counter Trend Signal: This is a stock that is currently bullish but expected to trade sideways or bearish.

1M/6M Trends:  Bullish/Bullish

Technical Score: 9/10

OptionsPlay Score: 134

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 Monday’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

Stocks started off with nice gap opening gains yesterday, but gave back a decent chunk of them by the close, with the SPX settling at 3982, up 12 points on the day after being up almost 50 at the high of the session. Your chart and the media will report a gain, but frankly, that session wasn’t anything to write home about.

SPX – Yesterday (5 min. bars)

You’ll recall back in January that I gave you a bearish long put spread play in ABBV (we made nice money on it). In that idea, I had used the $145 strike as the lower strike in the spread, as I had seen TDST Line support there. We see that not only did that level hold and also get an Aggressive Combo -13 count at that same level, but it has now moved up into its 2023 mid-range and is currently bounded on its top by its 50-DMA and bottom by its 200-DMA.

ABBV – Daily

In yesterday’s weekly outlook webinar, I said that it wouldn’t surprise me to see the market churn and go somewhat sideways in the near-term. As such, let’s look to put on a bearish iron condor spread, selling the March 17th $160/$165 call spread and selling the same dated $150/$145 put spread for what on Monday’s closing mid prices netted a $1.21 credit per condor.

Our goal is to hopefully collect the premium and watch this stay inside the $150 to $160 range over the next few weeks. Earnings don’t come out till late-April, so there’s no major catalyst I am aware of during our planned holding period. (I would have gone out a few more weeks, but there is no open interest at all in those other series.)