By Dan Darrow

December 20, 2022

Today's Trade Ideas

Symbol: M

Style: Event

Strategy: Call Spread


Long Jan20 $20 call

Short Jan20 $23 call

Action Area: $.90 - $1.15

Comments: M is a speculative bullish trade idea into early 2023. M had a surprisingly strong report a month ago, helping the stock continue its sizable rebound off the year-to-date low. M popped to 22.50+ on the day of its results, and it continued to grind up above 23.50 the following few sessions. Momentum stalled later in November, and selling picked up in early December, with a sharp slide lower starting post-CPI last week. M is back to where it was trading pre-earnings in November, and it is hanging at previous support around 19.50-20. M historically gives a holiday sales update at the beginning of January, and following the solid recent earnings print and several-week pullback, the stock looks set up well for a short-term bullish strategy for the event. The Jan20 call spread will be targeting a move to 21.25+ to start locking in money, and the trade will use a 30-40% net debit loss as a stop.

Symbol: DIA

Style: Swing

Strategy: Call Spread


Long Jan13 $329 call

Short Jan13 $335 call

Action Area: $2.60 - $3.00

Comments: DIA is a fast-developing bullish trade idea with a tight stop. Last week’s packed stretch of catalysts delivered movement for DIA, and the breakdown out of the recent consolidation led to a quick slide into the 320s and the 200day sma. Following the sharp slide, DIA has begun to stabilize above that moving average, with rising support from the 50day sma helping the ETF stop the snowballing momentum. A near-term bounce setup off the 200day sma is beginning to take shape, and DIA should see a quick move into the low-330s to fill the gap from Wednesday’s close (332.80). The Jan13 call spread will be targeting an initial move to 331+ to begin locking in money, and the swing trade will have a tight stop below 324.50 (under the 200day sma) or a 30-40% net debit loss, whichever happens first.

On The Radar

GSK lifted off its low from Monday today, and now we can use that level as a tight stop. The Jan20 call has been losing premium as the stock has slowly retraced back to 35, but buyers have showed interest around that level since Friday, indicating a near-term bottom may be in. If GSK can turn higher and close the gap from Thursday (35.63), the Jan20 call should recover premium quickly, so we can stick with the bullish trade for now. Monday’s low (34.73) will be the hard technical stop moving forward, though. 

The sun rises in the east, sets in the west, and SI slides steadily lower. SI has been in a methodical downtrend for months, with the stock spending the entire month of December below the key 8day ema. That moving average continues to provide downward pressure on the stock, and the Jan20 put spread roll down is getting increasingly close to the money. We will be watching for a fast dip <15.50 to manage the strangle again, and we can also tighten the stop on the bear portion of the trade to 20, using a break of the 8day ema as a cue to exit.

Open Positions

* The following Open Positions pertain to the Options In Play trade ideas from this and previous editions. Disclosure of the Trader Co-Author’s actual portfolio holdings, as of the date of each publication, is made below under "Trader Author Portfolio Holdings.".

Trader Author Portfolio Holdings

**As of 4pm ET December 20, 2022