Today, we are using some moving average filters to find bearish stocks and then looking at a couple of different trade ideas.
First the stock scanner:
Which produces these results:
Two companies that meet our criteria and they are Intel (INTC) and Alphabet (GOOGL).
Intel Bear Put Spread
Using the December 18 expiry, traders could buy the $57.50 put and sell the $50 put.
The price for the trade is $1.87 which means the trader would pay $187 to enter the trade. This is also the maximum loss. The maximum gain be calculated by taking the width between the strikes and subtracting the premium paid:
7.50 – 1.87 x 100 = $563.
The breakeven price for the trade is equal to the long put strike, less the premium. In this case, that gives us a breakeven price of $55.63.
Company Details:
Intel Corporation, one of the world's largest semiconductor company and primary supplier of microprocessors and chipsets, is gradually moving into data-centric businesses such as AI and autonomous driving.
Intel is a dominant player for microprocessors in both consumer and enterprise markets.
Data Center Group, Internet of Things Group, Mobileye, Non-Volatile memory solutions group and Programmable solutions Group and All Other business units form the crux of Intel's data-centric business model.
DCG segment deals with servers, workstations and other products for cloud, enterprise, and communication infrastructure market. IOTG offers high-performance compute solutions and embedded applications.
PSG segment offers programmable semiconductors, primarily FPGAs and structured ASICs.
Mobileye is engaged in developing computer vision and machine learning-based sensing, data analysis, localization, mapping, and driving policy technology for ADAS and autonomous driving.
The Barchart Technical Opinion rating is a 72% Sell with a Average short term outlook on maintaining the current direction.
Relative Strength just crossed above 30%. The market has bounced from oversold territory. Beware of a potential mean reversion.
Let’s look at another bear put spread, this time on Alphabet.
Alphabet Bear Put Spread
On GOOGL stock, traders could buy the December $285 put and sell the $265 put to create a bear put spread. That spread could be bought for around $5.16.
The cost of the trade is $516 which is also the maximum loss with the maximum possible gain being $1,484. The maximum gain would occur if GOOGL stock fell below $265 on the expiration date.
Company Details:
Alphabet has evolved from primarily being a search-engine provider to cloud computing, ad-based video and music streaming, autonomous vehicles, healthcare providers and others.
In the online search arena, Google is a monopoly with more than 94% of the online search volume and market.
Over the years, the company has witnessed increase in search queries, resulting from ongoing growth in user adoption and usage, primarily on mobile devices, continued growth in advertiser activity, and improvements in ad formats.
The company is gaining market share in the cloud-computing, driven by continued strength in Google Cloud Platform and Google Workspace.
Alphabet also enjoys a dominant position in the autonomous vehicles market, thanks to Waymo's relentless efforts. Also, it has bolstered its footprint in the healthcare industry with its life science division, Verily.
The Barchart Technical Opinion rating is a 88% Sell with a Strengthening short term outlook on maintaining the current direction.
Conclusion
There you have two different bearish trade ideas on two different stocks. Remember to always manage risk and have stop losses in place.
Please remember that options are risky, and investors can lose 100% of their investment. This article is for education purposes only and not a trade recommendation. Remember to always do your own due diligence and consult your financial advisor before making any investment decisions.
On the date of publication, Gavin McMaster did not directly have a position in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.