By Dan Darrow
December 14, 2022
Today's Trade Ideas
Strategy: Long Put
Contracts: Jan20 $20 put
Action Area: $1.25 - $1.55
Comments: T is a fast-developing bearish trade idea. Something had to give on T, and it looks like it has. With strong support from the 8day ema and 20day sma and sizable resistance at the 200day sma, T formed an increasingly tight pennant over the past month, waiting on a resolution in one direction. T was under pressure today, and it closed below both the 8day ema and 20day sma, starting a potential near-term breakdown. The stock has a clear path to down to 18 and the 50day sma (17.89), and the Jan20 put will be targeting an initial move to <18.25 to begin locking in money. The swing trade will have a very tight stop above 19.45 (above the 200day sma) or a 30-40% net debit loss, whichever happens first.
Strategy: Long Call
Contracts: Jan20 $50 call
Action Area: $2.40 - $2.85
Comments: CIEN is a bullish trade idea. A big bounce-back print last week sent CIEN soaring above 50 to erase the loss from the September report. In addition to closing the previous gap, CIEN reset above the key 200day sma, where it has started to form a new, higher base. With support coming in above that moving average and the quickly rising 8day ema close to joining underneath, the stock is setting up nicely for another leg higher, and there is an open path to August pivot resistance (~56). The Jan20 call will be targeting an initial move to 54+ to begin locking in money, and the swing trade will have a tight stop below 49 (under the 200day sma) or a 30-40% net debit loss, whichever happens first.
On The Radar
We are going to have to ride VKTX until expiration. MDGL has still not reported data, and because VKTX is a low debit sympathy play on MDGL, the Dec16 options are losing premium fast. Even though the odds of the company releasing Phase 3 data by the end of the week are low, it is still possible, and the lack of volume/liquidity on the VKTX Dec16 strangle forces us to stick with the position. If you are not comfortable with the options potentially going to $0, now would be a good time to close out the trade and/or roll out to Jan20 to buy more time.
DKNG is at a key spot. A large gap up yesterday led to another failure at the key 200day sma on DKNG, and the reversal lower put the stock under recent support at 14. DKNG failed to recover today, and the stock looks to be setting up for a near-term breakdown now. A clean break of 13.50 should start momentum rolling on the stock, and there is a clear unfilled gap at 11.66 underneath. Because the Dec30 put roll down is running low on time, we are going to monitor the position closely. If the stock doesn’t start making progress lower by Monday, the plan will be to roll out to buy more time for the trade.
Trader Author Portfolio Holdings
**As of 4pm ET December 14, 2022