By Dan Darrow

October 20, 2022

Today's Trade Ideas

Symbol: XLRE

Style: Swing

Strategy: Long Put

Contracts: Nov18 $35 put

Action Area: $1.30 - $1.65

Comments: XLRE is a bearish trade idea. The rate-sensitive REITs were hit hard in September, leading to a new 52-week low on XLRE. Selling continued into the start of October as the ETF slid into the low-30s, but it rebounded post-CPI along with the overall market. The rally drove XLRE through the 8day ema and into the 20day sma on Tuesday, where it quickly failed and turned lower again. Selling has resumed the past two sessions, and now it is setting up for a retest of the October low (33.12) as momentum builds to the downside. The Nov18 put will be targeting an initial move to <33.25 to begin locking in money, and the swing trade will have a tight stop above 35.50 (above the 20day sma) or a 30-40% net debit loss, whichever happens first.

Symbol: FIVN

Style: Swing

Strategy: Put Spread


Long Nov18 $55 put

Short Nov18 $45 put

Action Area: $3.00 - $3.60

Comments: FIVN is a fast-developing bearish trade idea. FIVN was rocked on 10/10 when the CEO unexpectedly resigned and the company announced preliminary results for the quarter. The stock dropped sharply from the high-70s down to the 50s on the day of the headline, and it continued to slide the following few sessions under 51. It has rebounded over the past week, but the rally stalled around 60 and the key 8day ema, setting up a quick near-term bear pattern. With the fast-moving 8day ema providing overhead pressure, FIVN should turn lower to retest the October low (50.88) soon, and the Nov18 put spread will be targeting an initial move to <52.50 to lock in money, and the swing trade will have a tight stop above 60.50 or a 30-40% net debit loss, whichever happens first.

On The Radar

Tomorrow is main monthly Oct21 expiration, and there is one position set to expire: ICPT $25-$30 call spread. This is the bull portion of a strangle, and after disappointing data three weeks ago, the trade has been on watch for an opportunity to recover premium (which never materialized). It likely won’t be in play tomorrow, but if the options (or the stock) catch a bid, I will pass along an update.

We can tighten the stop on ISEE moving forward. The quick bull flag above 20 resolved higher as the stock ran to 22+ this week, and it continues to ride the fast-moving 8day ema to the upside. Because that moving average and the 20 support level are important for the momentum play, we will tighten the stop on the Nov18 call spread roll up to 19.50 now. A break below that could lead to a deeper retracement, so we want to make sure to get out before that happens. 

ZM is showing resilience this week. After breaking through key 20day sma resistance on Tuesday, ZM has held above the moving average well, with a strong session today putting it within striking distance of the 50day sma (82.42) early this morning. If ZM can clear that moving average now, it should begin to accelerate into the mid-to-high 80s, so we will be keeping an eye on near-term developments on the stock. If the bull portion of the Dec16 strangle begins to trade to $2.00+, it may make sense to cut back risk on the position, so we will also be monitoring the options the next few sessions.

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 20, 2022