By Dan Darrow
December 19, 2022
Today's Trade Ideas
Symbol: TGT
Style: Swing
Strategy: Put Spread
Contracts:
Long Jan20 $142 put
Short Jan20 $136 put
Action Area: $1.65 - $1.95
Comments: TGT is a bearish trade idea. A surprisingly weak print in November led to a swift 15%+ drop on the day of the results, but traders were more forgiving over the following couple of weeks. The stock ground back up into the high-160s into the beginning of December, but a big turn lower on 12/05 knocked it below all near-term moving averages, and it started a sustained multi-week slide. TGT slipped into the 140s last week, and today’s early selling set up a test of key previous support at 145, which was lost in the afternoon. With the stock breaking recent support, momentum should build for a retest of the 52-week low (137.16), and the Jan20 put spread will be targeting an initial move to <141 to begin locking in money. The swing trade will use a 30-40% net debit loss as a stop.
Style: Swing
Strategy: Put Spread
Contracts:
Long Jan20 $105.50 put
Short Jan20 $101 put
Action Area: $1.35 - $1.70
Comments: TLT is a fast-developing bearish trade idea. The rally on Treasuries since the end of October has been impressive, but the move looks to be nearing its end. TLT blew through the 100day sma at the beginning of December and kept running to 109+ as it worked on reclaiming previous support. The past couple of weeks have been choppy for TLT as momentum began to stall, but it stubbornly held the key 8day ema into Friday’s close. The ETF lost that moving average today, though, and it slid into the 20day sma and 100day sma as well, opening it up for a near-term pullback. Under 105.25, TLT should begin to build momentum for a move closer to 100, and the Jan20 put spread will be targeting an initial move to <103.75 to begin locking in money. The swing trade will use a 30-40% net debit loss as a stop.
On The Radar
We like to keep some bullish positions open even as the market slides (or bearish positions in the opposite scenario) because bounces can be sharp and develop quickly, and it is nice having risk already in place to capitalize on the move. XBI hasn’t had much traction since the Jan20 call spread was initiated, and even though there is a major upcoming catalyst with the JPM Healthcare conference in early January, we will need to monitor the stock closely tomorrow. The weak action put the ETF right at the bottom of recent support (79), and if it doesn’t bounce early tomorrow, a near-term breakdown may develop. We will need to work quickly to exit the Jan20 call spread in that case, as the shorter-term option premium is already starting to get hit.
We will also be watching PARA tomorrow, though this trade is nearing the initial target. The stock ticked into the 16.75 target zone late in the afternoon, and following a weak close just above that level, looks set up well for further downside tomorrow. 16.50 should be the next area of focus underneath, so the plan will be to watch for either an early drop down there or the Jan20 put will be rolled if the stock begins to show buying interest at 16.75 again.
Open Positions
Trader Author Portfolio Holdings
**As of 4pm ET August 12, 2022
