August 08, 2022

Today's Trade Ideas

Symbol: SOFI

Style: Swing 

Strategy: Long Call

Contracts: Sep16 $8 call

Action Area: $.55 - $.75

Comments: SOFI is a fast-developing bullish trade idea. After a couple of lackluster prints, SOFI delivered a solid report last week, and that was a welcomed relief for bulls. SOFI had been in a steady downtrend since the end of 2021, with resistance at the 20day sma, 50day sma, and 100day sma along the way. The latter marked the top of the most recent rally attempt in mid-July, but the strong reaction to earnings last week sent the stock surging through that key moving average. SOFI’s high-volume breakout on Wednesday put the stock above 8 and all near-term levels of resistance, and after a few-day consolidation, the stock is setting up for another leg higher. With the 8day ema close underneath, SOFI should turn higher soon, and there is a path to 8.75 (4/06 unfilled gap) and the round 10 level above it. The Sep16 call will be targeting an initial move to 8.75+ to begin locking in money, and the swing trade will use a 40-50% net debit loss as a stop.

Symbol: FCEL

Style: Event

Strategy: Straddle


Long Aug19 $4.50 call

Long  Aug19 $4.50 put

Action Area: $.50 - $.65

Comments: FCEL is a short-term straddle candidate. FCEL’s three closest peers will report earnings this week (PLUG, BLDP, BE) and FCEL will not, creating an interesting opportunity for a sympathy move. The Hydrogen Fuel Cell names have historically been a closely-correlated group, though FCEL has lagged its peers over the past few weeks. The stock had a solid start to the week, popping >7% to close above the 100day sma and recent resistance at 4.40 for the first time since May, and with room to run above and an unfilled gap now below, the stock is set up well for a large swing over the next several sessions. The Aug19 straddle will be targeting a move of $.65+ in either direction over the next week, and the trade will have no stop until after the last of FCEL’s peers report on Wednesday morning, so be sure to plan your size accordingly.

On The Radar

XLV’s break of the 200day sma two weeks ago was short-lived. With the Health Care sector ETF setting up well for a breakout, the move through the 200day sma seemed poised to start a near-term run to 135+. XLV reversed the following day, however, and it has struggled to get any traction above that moving average since. The Sep16 call spread has already been rolled up, so we can be patient with the position while the stock searches for buyers, but we will also tighten the stop on trade to 129.75 moving forward. That would put it back below 130 and under the 20day sma and disrupt the recent two-week bull flag that has formed. 

RIVN will be on close watch tomorrow. It’s been a slow grind of a move higher for RIVN, but it is finally starting to make a push into the high-30s. Today’s strong session sent the stock above 38 and the Sep9 call spread roll up into the money, and the solid finish should keep momentum rolling into tomorrow. The next major focus level above is around 40-41 now. With earnings due out on Thursday, though, we will be looking for an opportunity to scale back risk and/or lock in the trade this week. 

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 08, 2022