By Dan Darrow
November 10, 2022
Today's Trade Ideas
Symbol: ETSY
Style: Swing
Strategy: Call Spread
Contracts:
Long Dec16 $115 call
Short Dec16 $125 call
Action Area: $3.20 - $3.85
Comments: ETSY is setting up for a breakout. ETSY’s solid report earlier in November failed to drive it through key 50day sma resistance, and it spent the first half of this week spinning around under the moving average, looking for direction. The CPI print this morning gave the stock a big boost, though, and after opening below the 50day sma, ETSY broke out on large volume, with a strong push past the 200day sma in the afternoon, opening the chart up for more near-term upside. ETSY has a clear path to fill the 10/06 gap (115.11), and the Dec16 call spread will be targeting an initial move to 115+ to begin locking in money. The swing trade will use a 30-40% net debit loss as a stop.
Style: Swing
Strategy: Call Spread
Contracts:
Long Dec16 $285 call
Short Dec16 $300 call
Action Area: $5.00 - $5.80
Comments: NFLX is a bullish trade idea. Earnings delivered the big break of key monthly resistance at 250, and momentum carried NFLX up to 300+ over the following week, but just as quickly as it started, momentum swung to the downside, wiping out most of the earnings-related gains by Monday. NFLX sank to 252.09 on Monday morning to backtest the huge monthly resistance range, but buyers stepped to defend the stock before it slid into the 240s. It has stabilized this week, and today’s pop post-CPI began a turn higher, with a reset of the 200day sma an important near-term development. Now that it is past ~272 and the 20day sma, NFLX should begin to build momentum back to the upside, and the Dec16 call spread will be targeting an initial move to 284+ to begin locking in money. The swing trade will have a tight stop below 249 (a failed breakout) or a 30-40% net debit loss, whichever happens first.
On The Radar
Tomorrow is weekly Nov11 expiration, and there are no positions set to expire. Following the huge rally post-CPI today, it may end up being a busy conclusion to the week, so keep an eye out for updates early tomorrow morning.
ALGN traded higher along with the overall market today, but the bearish pattern is still intact. ALGN lifted back above the 8day ema (which it had been consolidating under recently) off the open, and it pushed higher into the low-190s to test the 20day sma late in the morning. The stock failed to reset the 20day sma, though, and it is still below previous support at 200, so it is worth being patient with the Dec16 put fly. If the stock weakens or the overall market pulls back, ALGN should easily roll back into the low-180s, and there is plenty of time for the current options. We can place a new technical stop at 207.50 moving forward.
BIIB finally announced a new CEO this morning, and the news was a welcome positive. The headline helped BIIB shrug off some Biotech/Pharma weakness today, sending the stock back to the 290s to finish at its best closing level of the year. There are a couple of key catalysts coming up on BIIB as we get into the middle/end of November now: competitor Alzheimer’s data from Roche is due out any day now, while BIIB will be presenting the full data set from its recent Phase 3 trial at the upcoming CTAD conference. It should be a busy couple of weeks for BIIB, so we will be looking for another opportunity to scale back risk on the Dec16 call spread in the near term.
Open Positions
Trader Author Portfolio Holdings
**As of 4pm ET August 12, 2022
