By Dan Darrow

October 17, 2022

Today's Trade Ideas

Symbol: AMZN

Style: Event

Strategy: Call Spread


Long Nov04 $117 call

Short Nov04 $121 call

Action Area: $1.35 - $1.65

Comments: AMZN is a speculative ramp into the report candidate. Typically, we like to target strong stocks in strong sectors that are coming off of a strong quarter (or multiple strong quarters in a row) for rallies into earnings, but AMZN only checks one of those boxes. With the overall market weak and AMZN below most moving averages (it reclaimed the 8day ema today), the technical setup is not as interesting for the stock, but having delivered a solid print in July, there are reasons to expect buyers to step in on the stock ahead of next week’s report (10/27). The company just hosted its second Prime day of the year and will be entering the busy holiday season, which, when combined with last quarter’s solid numbers, should get traders interested over the next week. The Nov04 call spread will be targeting a rally on AMZN before next Thursday to lock in money or reduce risk, and the trade will use a tighter 25-35% net debit loss as a stop (because it is a short-term position).

Symbol: ADBE

Style: Swing

Strategy: Call Spread


Long Nov18 $300 call

Short Nov18 $310 call

Action Area: $3.70 - $4.35

Comments: ADBE is a bullish trade idea. Mixed earnings and an expensive M&A deal combined for a large breakdown on ADBE in mid-September, and the stock struggled to find support for the remainder of the month. It stabilized in October and lifted off its recent low (274.73), but the stock has been unable to sustain a run above the 8day ema and 20day sma. ADBE pushed through both moving averages on Thursday, though, and has built a quick base above them the past couple of sessions, opening the stock up for a near-term rally. There is a path to 300, and if it can clear the round number, the 9/15 closing gap at 309.13 should be in play quickly. The Nov18 call spread will be targeting an initial move to 302.50+ to begin locking in money, and the swing trade will use a 40-50% net debit loss as a stop. 

On The Radar

It’s not flying higher, but GSK is making steady progress on a reversal. After rallying above 30 and the 8day ema and 20day sma at the beginning of October, GSK built a solid base around the top of recent resistance, and it began to turn higher on Thursday. Continued strength Friday and today have led to the stock decisively breaking the downtrend, and the 50day sma (32.18) should be in play soon. The Nov18 call will be looking for a move to ~32 to start to lock in money, and after today’s solid action, we may get a shot tomorrow.

The NKE Nov18 put spread was initiated with no technical stop, but after a week of trading, we are going to institute one moving forward. NKE has been struggling to reset the key 8day ema since it gapped lower on earnings, but today it opened above the moving average and sat in a higher range around 90 most of the session. The stock is still under the early October bounce high, and the bear pattern is still intact, but we need to place a technical stop at 92.25 (above the 20day sma) in case a bigger rebound develops. We want to make sure to exit the trade before momentum can kick in on a recovery.

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 17, 2022