By Dan Darrow

October 31, 2022

Today's Trade Ideas

Symbol: NOW

Style: Swing

Strategy: Call Spread


Long Nov25 $435 call

Short Nov25 $445 call

Action Area: $3.50 - $4.40

Comments: NOW is a fast-developing bullish trade idea. NOW was a Software (and Tech in general) standout last week following its solid report, and the huge gap higher on earnings put the stock back above a key level. NOW popped to reset the 50day sma on the day of the print and it found buyers at it on early weakness Friday. With today’s move highlighting relative strength, the stock looks set up well for another near-term leg higher, and there is an open path to the 100day sma now (438.50). The Nov25 call spread will be targeting an initial move to 435+ to begin locking in money, and the swing trade will use a 30-40% net debit loss as a stop.

Symbol: THC

Style: Swing

Strategy: Put Spread


Long Dec16 $45 put

Short Dec16 $40 put

Action Area: $1.80 - $2.20

Comments: THC is a bearish trade idea (with a tight stop). Hospital/Emergency Care name THC surprised the street with a sizable guide lower when the company reported two weeks ago, leading to a major breakdown below the multi-year support level at 50. The stock dropped under 37 immediately following the results but has since rebounded back into the mid-40s. THC bumped into the 8day ema late last week and has found steady selling interest at it the past few sessions, forming a new lower range and setting the stock up for a turn lower. The Dec16 put spread will be targeting an initial move to <41.50 to begin locking in money, and the swing trade will have a tight stop above 47.25 or a 30-40% net debit loss, whichever happens first.

On The Radar

UUP will be on close watch tomorrow. Back-to-back solid sessions has UUP above 30 again (and nicely above the 50day sma), and today’s move higher put the ETF within a few cents of the initial target (30.10+). We want to make sure to work quickly to lock in some money on a move into that area because it lines up with the 20day sma (30.10). If UUP stalls around 30.00 again tomorrow, it may be smarter to roll up the Dec16 call sooner. Keep an eye out for an update on this one.

We can tighten the stop on the TGT trade now. Having followed through quickly on the break above the 50day sma, TGT is now beginning to form a new base in the mid-160s, and the 8day ema began to join underneath today. That moving average catching up to the stock should start another leg higher soon, so the Nov18 call spread roll up will be looking for a fast run to 170+ to manage the trade again. We will also tighten the stop on the position to 159.50 moving forward. That would put TGT back below the key 50day sma and change the bullish thesis.

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 31, 2022