By Dan Darrow
November 08, 2022
Today's Trade Ideas
Strategy: Long Call
Contracts: Dec16 $30 call
Action Area: $.80 - $1.25
Comments: MBLY is a speculative bullish trade idea. There have not been many high-profile Tech IPOs this year (or many IPOs in general), so MBLY’s recent debut has been a closely-watched event. Weak action in Tech and a downbeat Semi environment hurt the pricing of the MBLY IPO, but the stock has been steady since it opened for trading on 10/26 at 26.71, and an interesting bullish pattern is beginning to form. MBLY has stabilized around 26 over the past week, and with Semis slowly starting to rebound, the stock could be prepping for a turn higher soon. If MBLY can push past 27, the IPO day high (29.86) should come into play quickly, and a break through 30 could ignite momentum to the upside. The Dec16 call is a speculative bullish trade idea targeting an initial move to 29+. The swing trade will have a tight stop below 24.75 or a 40-50% net debit loss, whichever happens first.
Strategy: Call Spread
Long Dec16 $410 call
Short Dec16 $420 call
Action Area: $4.10 - $4.75
Comments: DE is a bullish trade idea. DE had a much more modest correction in September than many of its Industrial peers, and that put it in a great position to turn higher quickly once the sector began to catch rotational flows in October. The pullback in September knocked the stock below the key 200day sma for a few weeks, but by the middle of October, it had reset the moving average and started to tick higher into the 390s to retest the high from August. For the past two weeks, DE has been consolidating in a tight range around 400, establishing a new base above the August high and setting up nicely for a near-term breakout and run. Above 400, there is an open path to the 420s to fill the gap from 4/21 (424.36), and the Dec16 call spread will be targeting an initial move to 412+ to begin locking in money. The swing trade will have a tight stop below 389 or a 30-40% net debit loss, whichever happens first.
On The Radar
RH is on close watch tomorrow. The stock dipped into the 230 range again last week and found buyers similar to October, and now it has rebounded quickly back to recent resistance at the 100day sma. RH has not been able to make progress to the downside since first sliding into the 230s a few weeks ago, so we will need to make sure to close the Nov18 put fly roll down if the stock begins to clear the 100day sma. That could start a major breakout, and the short-term options will get hit quickly in that scenario.
KSS gave a boost to the brick-and-mortar Retail names this morning. After announcing the CEO would be stepping down, KSS gave preliminary guidance that was better than feared and that lifted the stock and several of its peers as well. TGT had been stuck in a steady downtrend since topping out two weeks ago, but today’s rally put it through recent resistance and should start a move higher as TGT’s earnings come into view (11/16). The Nov18 options have held onto their value well because of the earnings report, so we can give the position a little room here and see if it can string together a run into the high-160s now that it has woken up.
Trader Author Portfolio Holdings
**As of 4pm ET November 08, 2022