By Dan Darrow

October 13, 2022

Today's Trade Ideas

Symbol: DAL

Style: Swing

Strategy: Long Call

Contracts: Nov18 $30 call

Action Area: $2.10 - $2.45

Comments: DAL is a fast-developing bullish trade idea. AAL raised revenue guidance earlier this week, and DAL delivered a solid beat-and-raise this morning, providing a strong vote of confidence in the sector. DAL opened red along with the overall market post-CPI, but it staged a big intraday rebound to close near the high of the session and right under October resistance (30.75). A near-term breakout on the stock is setting up, and on a clean break of 30.75, DAL has an open path to the 50day sma (31.75) and the 100day sma (32.43) above it. The Nov18 call will be targeting an initial move to 31.70+, and the swing trade will use a 30-40% net debit loss as a stop.

Symbol: RH

Style: Swing

Strategy: Put Spread


Long Nov18 $230 put

Short Nov18 $220 put

Action Area: $2.75 - $3.50

Comments: RH is a bearish trade idea. A late June warning sent RH spiraling below 210, but by the time September earnings rolled around, the stock was back above 260. A mixed print led to an initial bounce to the high-280s, but momentum stalled around the moving average cluster (20day sma, 50day sma, and 100day sma), and the stock sank back into the 250 range, where it has been consolidating since. Recent weakness has pushed RH to the bottom of its month-long range, and a lack of a material bounce has put the stock in a susceptible spot for a near-term breakdown. Under 240 support, RH has a clear path to the late June low (207.37), and the Nov18 put spread will be targeting an initial move to <232 to begin locking in money. The swing trade will have a tight stop above 253.50 (above the 8day ema and 20day sma) or a 40-50% net debit loss, whichever happens first.

On The Radar

Tomorrow is weekly Oct14 expiration, and there are no positions set to expire. After today’s huge volume and high-volatility reversal across the market, tomorrow morning will likely be busy, so be sure to keep an eye out for updates off the open.

MA may give the double dip for the strangle. The weak open today gave a great opportunity to lock in the Oct21 put spread roll down, and then the large intraday reversal may provide an opportunity to make money on the Oct21 call spread now (which was just recently rolled down). The strong close on MA put it in the mid-290s, and if the Financials catch a bid tomorrow, 300+ is possible for MA. We will be watching for continuation higher tomorrow to manage this trade quickly, so keep an eye out for a possible early update if the stock opens green. 

We’ve given ATVI slightly more room as it has dripped lower the past month because the position is a longer-term one and the premiums are holding in ok, but the action is not improving. ATVI has been riding the 8day ema lower since August, and today’s big bounce across the market failed to get the stock above that moving average. If ATVI doesn’t get a sustained bounce going within the next couple of weeks, we will need to manage the trade. Earnings are on 11/7, and the position will need to be closed or rolled down/out before then.

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 13, 2022