By Dan Darrow

November 09, 2022

Today's Trade Ideas

Symbol: ROKU

Style: Swing

Strategy: Put Spread


Long Dec02 $46 put

Short Dec02 $40 put

Action Area: $1.65 - $2.05

Comments: ROKU is a bearish trade idea (with a tight stop). A wide revenue miss and a weak guide sent ROKU tumbling the day after its results last week, but the opening gap <45 was bought back quickly. ROKU staged a large rebound intraday on 11/03 to nearly turn green, but momentum stalled before it could close the gap and the stock rolled lower into the close to finish below the 8day ema and 20day sma. ROKU has remained in a tight range under both of those moving averages this week, and today’s move lower put it at the bottom of recent support and is setting up a near-term breakdown on the stock. Under 47.50, momentum should build for a retest of the earnings day low (44.50), and the downtrend should continue into the low-40s once below it. The Dec02 put spread will be targeting an initial move to <45 to begin locking in money, and the swing trade will have a tight stop above 52.15 (above the 20day sma) or a 30-40% net debit loss, whichever happens first.

Symbol: DVA

Style: Swing

Strategy: Put Spread


Long Dec16 $65 put

Short Dec16 $60 put

Action Area: $1.55 - $1.90

Comments: DVA is a bearish trade idea. DVA had a surprisingly large miss and an even worse guide when the company reported at the end of October, and the 25%+ drop was one of the worst one-day losses for the stock in years. DVA sank to ~70 following the results, and it has been stuck in an increasingly tight range at it since, with the lower consolidation allowing the 8day ema to catch up overhead. Pressure should start to build on the downside as that moving average joins, and under 67.50, the stock should begin to build momentum into the low-60s to retest levels from March 2020. The Dec16 put spread will be targeting an initial move to <64 to begin locking in money, and the swing trade will have a tight stop above 70.25 or a 30-40% net debit loss, whichever happens first.

Note: Because the CPI reading in the premarket tomorrow is a high-impact catalyst, we are going to give ROKU and DVA 30-45 minutes off the open to make sure the setups are still valid before initiating the positions.

On The Radar

I put together a Youtube video breaking down the setup on QQQ and SPY heading into the CPI tomorrow, so be sure to check it out before the 8:30 AM numbers (link here: November CPI Day). The CPI has been a huge catalyst for the overall market for several months and has recently led to trending action on the indices for a couple of weeks, so it is important to know what levels to watch for tomorrow to capitalize on the move. 

ZM may give us a double dip on the Dec16 strangle. The first move out of the consolidation was to the upside, and the strong run into the low-80s gave a nice opportunity to scale back risk on the bull portion of the strangle recently. Momentum has since stalled, and the stock was under heavy pressure today ( the company’s Zoomtopia event failed to inspire traders), sliding back to the low-70s to probe the low from October (70.43). If ZM loses 70, it should begin to accelerate into the mid-60s, and that should work out nicely for the Dec16 put spread portion of the strangle now. We will be watching for a move to <65 to start managing the bear side of strangle.

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 November 09, 2022