August 11, 2022

Today's Trade Ideas

Symbol: UAA

Style: Swing

Strategy: Long Call

Contracts: Oct21 $10 call

Action Area: $.65 - $.95

Comments: UAA is a bullish trade idea. 2022 has not gone well for UAA. Industry-wide pressures in Retail, poor performance, and the unexpected resignation of the CEO in May have contributed to the stock’s 50%+ drop year-to-date, and at one point in July, the stock was nearing its worst levels since the beginning of the pandemic in 2020. UAA has lifted off its recent low over the last several weeks, though, thanks in part to a better-than-feared report earlier in August. The stock pushed past the 50day sma on the day of its results (8/03), and it has continued to build a base above the level over the past week as support steadily rises underneath from the 8day ema. With the 8day ema now crossing above the 50day sma, a near-term breakout is brewing, and there is open room to run into the next key level around 11-11.50. The Oct21 call is a slightly longer-dated call targeting an initial move to 10.50+ to begin locking in money. The swing trade will have a tight stop below 9 (under 8day ema, 50day sma, and 20day sma support) or a 40-50% net debit loss, whichever happens first.

Symbol: XLE

Style: Swing

Strategy: Call Spread


Long Oct21 $80 call

Short Oct21 $88 call

Action Area: $2.25 - $2.85

Comments: XLE is a bullish trade idea. A strong session across the Energy space today saw many big names wake up out of recent lower ranges, and XLE had an impressive performance to put it at a critical level. XLE’s rally today sent it into the 100day sma for the third time since it lost the moving average in mid-June. The previous two attempts to reclaim the 100day sma failed, but Natural Gas is closing in on the high of the year and Oil is putting together a bounce, so tailwinds are starting to turn in its favor. On a clean break of 78.50, XLE should begin to build momentum out of its recent range and start a run into the low-80s, and the Oct21 call spread will be targeting an initial move to 81+ to begin locking in money. The swing trade will use a 40-50% net debit loss as a stop.

On The Radar

Tomorrow is weekly Aug12 expiration, and there are no positions set to expire. After a busy session of managing trades today, it may end up being a slower morning tomorrow, but keep an eye out for updates if indices see a sizable early move.

The 18 level is turning into temporary support on T. The stock has been making slow and steady progress lower after bouncing into the 8day ema two weeks ago, but the selling has slowed since it hit 18, with multiple days sellers stepping in at the level recently. We have been looking for a break of 18 to roll down the Sep16 put, but if the T doesn’t break the level tomorrow, the trade will be rolled down sooner. We will also tighten the stop on the swing trade to 18.40 moving forward, as the pattern revolves around a continued slide with the 8day ema as resistance. 

STX will be on close watch tomorrow. The whipsaw move from dropping sharply on MU’s warning to popping on today’s risk-on Semi rally made for a volatile few sessions, and while STX finished off the high of the day, it did close above the key 100day sma. That moving average is an important signal for the bear thesis, so if STX doesn’t reverse back below it tomorrow (81.18), we are going to have to close the Sep16 put spread. We don’t want to let the stock begin to accelerate out of the year-to-date downtrend. 

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 11, 2022