By Dan Darrow

September 26, 2022

Today's Trade Ideas

Symbol: BTU

Style: Swing

Strategy: Put Spread


Long Oct21 $20 put

Short Oct21 $16 put

Action Area: $1.20 - $1.55

Comments: BTU is a bearish trade idea. Commodities are breaking down across the board, and after a period of outperformance in August, Coal names are beginning to turn quickly lower as well. BTU came close to revisiting its June high (29.85) during the late August run, but momentum stopped immediately post-Jackson Hole, and the stock has been steadily sliding since. BTU sank into the 200day sma last Monday and bounced, marking its third test of the moving average since the start of July, but the move higher was shallow, and by Friday’s close, the stock was below the key moving average. With support in the process of breaking, BTU is set up well for an extended move lower, and the Oct21 put spread will be targeting an initial move to <18.50 to begin locking in money. The swing trade will use a 40-50% net debit loss as a stop.

Symbol: ISEE

Style: Swing/Event

Strategy: Call Spread


Long Oct21 $15 call

Short Oct21 $20 call

Action Area: $.95 - $1.30

Comments: ISEE is a speculative bullish trade idea. ISEE’s Phase 3 data release was one of the bigger Biotech events in September, and while the stock moved >65% on the day of the data, it actually was a smaller move than what the options market was expecting. ISEE ended up tacking on more gains over the next few sessions, with momentum carrying it to ~21 before it finally ran out of gas. The stock has retraced back into the 15 level and is testing the 20day sma for the first time since the data release, setting up a near-term bounce after eight red sessions in a row. ISEE will present the full set of data this Friday (9/30) at a medical conference, and the presentation could be the spark to start a turn and run higher. The Oct21 call spread is a speculative strategy targeting an initial move to 16+ to reduce risk, and the trade will use a 40-50% net debit loss as a stop.

On The Radar

MA is getting close to a roll zone. MA lost the long-term support level around 305-310 on Thursday, continued sliding Friday, and it briefly ticked into the 280s today before firming up. The stock settled into an afternoon range around 290, and it is coming into sight of the $18-20 move target zone we are looking for on the Oct21 strangle. The plan will be to wait for a move to <287 to start reducing risk on the bear side of the position while also tightening the stop on the bear side of the position to 305. A breakdown and reversal back above key support could start a major rebound, so we want to be sure to reduce risk if that happens. 

We backed off the LVS Nov18 call spread idea last Wednesday following the major reversal lower on the stock that session. The bull strategy revolved around a breakout through the key 40 level, and post-FOMC, the stock had slid back below 37. The plan was to watch for a reset of 39-39.50 for a possible revisit, and now we are back into that zone. LVS popped today on news that China would allow tour groups to visit Macau, and the stock closed above 39.50 and within striking distance of 40 again. We will watch to see if it can hang in well tomorrow and begin to establish a new base above 39 before entering a position, so this will be a focus the next couple of sessions. I will send out an update once signals line up for a trade.

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 September 26, 2022