August 03, 2022

Today's Trade Ideas

Symbol: MSFT

Style: Swing

Strategy: Call Spread


Long Sep16 $290 call

Short Sep16 $300 call

Action Area: $3.00 - $3.65

Comments: MSFT is a fast-developing bullish trade idea. A better-than-feared quarter (they cut guidance in early June) and a solid guide propelled MSFT higher last week, breaking through key recent downtrend resistance and setting it up for further upside. MSFT’s strong session last Wednesday sent it above the four-month downtrend and into the 270s, and the stock continued to build momentum the next couple of sessions as it cleared the 100day sma and ticked into the 280s. Buying cooled early this week, but the stock formed a higher base above the 100day sma as the 8day ema rose, and today’s rally put it right back at the high from last week (282). With a strong breakout on earnings and several sessions of digestion, MSFT is setting up for another leg higher in the near term, and the Sep16 call spread will be targeting an initial move to 289+ (an unfilled gap from 5/04) to lock in money. The swing trade will have a tight stop below 273.75 or a 40-50% net debit loss, whichever happens first.

Symbol: JETS

Style: Swing

Strategy: Long Call

Contracts: Sep16 $18 call

Action Area: $.95 - $1.25

Comments: JETS is a bullish trade idea. Airlines had a rough June. The sector tumbled after the CPI came in hotter-than-anticipated, and news around massive flight and travel disruptions contributed to the lousy sentiment. The action on JETS improved in July until mixed earnings stopped the ascent, but a steady recovery into the month-end and a solid start to August has made for an interesting near-term setup. Previous support at 18 turned into resistance during June and July, but JETS powered through that level today (and the 50day sma as well), resetting support and opening the chart up for a run to ~19.25 and the 100day sma. The Sep16 call will be targeting an initial move to 19+ to begin to lock in money, and the swing trade will have a tight stop below 17.50 or a 40-50% net debit loss, whichever happens first.

On The Radar

HACK will be on close watch the next couple of sessions. We were focused on OKTA as a sympathy play on a busy week of Cybersecurity reports, but HACK is also another name that will be in play on the earnings releases. The group caught a strong bid today, and HACK finished up sharply, marking its first close above 50 since early May. The Sep16 call spread roll up has finally moved into the money, and we will be watching for continuation tomorrow to lock in more gains after being patient with the position. The 100day sma is close above (50.65), so it will be important to work quickly if sellers start to get aggressive near that level. 

STZ needs to get moving quickly. The breakout and quick reversal lower in July has led to several weeks of choppy action, but STZ is beginning to climb into the high-240s again, and the key 250 level is coming into play. STZ will need to make a sustained push through 250 over the next few sessions for the Aug19 call fly to start to work, so we will need to pay close attention to the stock in the near term. If this fails to clear 250 again, we will likely have to exit the call fly or roll out to a longer-term position to buy more time for the trade to develop.

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 August 03, 2022