By Dan Darrow

October 11, 2022

Today's Trade Ideas

Symbol: S

Style: Swing

Strategy: Put Spread


Long Nov18 $22 put

Short Nov18 $18 put

Action Area: $1.00 - $1.40

Comments: S is a bearish trade idea. Software stocks were hit hard on Monday, leading to a high-participation break of key support on S. The Cybersecurity stock sat in a sideways range between 25 and 30 since the start of August, with a brief dip on earnings (8/31) below 24 quickly bought back. Monday’s sharp drop on above-average volume put S well below 25 and all moving averages, and today’s continuation lower should start a sustained slide into the high teens/20 area to retest support from May/June. The Nov18 put spread will be targeting an initial move to <21 to begin locking in money, and the swing trade will use a 40-50% net debit loss as a stop.

Symbol: ISEE

Style: Event

Strategy: Call Spread


Long Nov18 $20call

Short Nov18 $25 call

Action Area: $1.35 - $1.85

Comments: We are going to do a quick revisit on ISEE. We timed the turn on ISEE perfectly at the end of September, with the stock waking up and going on an extended run into the high teens ahead of its Phase 3 data presentation at a conference. ISEE ended up rallying to a new 52-week high early last week but has since pulled back, and it is beginning to form a new base above 20. With rising support from the 8day ema, ISEE looks set up well for another extension higher, and the Nov18 call spread will be targeting an initial move to 22.50+ to begin locking in money. The strategy will have a tighter 25-35% net debit stop loss to make sure to not give back too much of the gains from the recent trade.

On The Radar

TWLO will be on close watch tomorrow. After a great stretch last week, TWLO has fallen under pressure this week to wipe out all of the gains from October. The original Nov18 call spread was rolled up when the stock rallied into the high-70s, but now we need to revert back to the tight technical stop for the current spread at 65. That was the original stop level for the position, and a break below that could open TWLO up for an extended drop, so we will need to hit the exit quickly. 

FDX has shown resilience since the market-wide slide on Friday, but the stock needs to reset above the 8day ema soon. FDX dipped early on Friday under that key moving average but snapped back nicely to finish right at it that session. It spun around the 8day ema yesterday, and it attempted to put together a rally above it early this morning before rolling over. FDX needs to reclaim the 8day ema quickly, or momentum may begin to build on the downside again. When initiating the Nov18 call spread last week, we instituted a 148 technical stop, and we will make sure to use that as a hard exit on the downside. A slide below that could lead to a fast retest of the September low.

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 October 11, 2022