By Dan Darrow

August 16, 2022

Today's Trade Ideas

Symbol: NVAX

Style: Swing

Strategy: Strangle


Long Sep16 $50 call

Short Sep16 $55 call

Long Sep16 $35 put

Short Sep16 $ 30 put

Action Area: $1.75 - $2.20

Comments: NVAX is a speculative volatility strategy candidate. NVAX had an eye-opening miss last week when it reported results, and a significant cut to the yearly guidance was a serious disappointment for bulls. The stock sank sharply on the day of the print but stabilized before retesting the June low (34.88), and it has formed a tight week-long range since that session. NVAX’s consolidation has created an interesting setup for a strangle, with ~$8 of room lower to retest the June low and ~$14 room higher to close the earnings gap (which we’ve seen many stocks do recently). The Sep16 strangle will be targeting a move of $8+ in either direction over the next several weeks as the recent consolidation resolves, and the trade will use a 40-50% net debit loss to begin with. Because the stock can be headline-driven, it is a more speculative trade, so be sure to plan your size accordingly.

Symbol: AMD

Style: Swing

Strategy: Call Spread


Long Oct21 $105 call

Short Oct21 $115 call

Action Area: $2.90 - $3.45

Comments: AMD is a bullish trade idea. After a strong run into earnings and a quick run after earnings, AMD was in need of a pause. Momentum slowed only temporarily following the company’s solid print a couple of weeks ago, and the one-day dip was bought immediately, leading to fast pop to 104.59 the following day. NVDA’s warning early last week weighed on AMD as well, though, but the pullback on the stock was met with buyers at the 100day sma, and it rebounded quickly to reset above the 100 level by Friday. With a several-day base forming above 100 and rising support from the 8day ema, AMD looks set up well for an extension higher, and there is a clear path to the June high (109.57) before any major resistance comes into play. The Oct21 call spread will be targeting an initial move to 105+ to begin locking in money, and the swing trade will use a 40-50% net debit loss as a stop (we can institute a technical stop later).

On The Radar

LCID is not breaking down but it is also not bouncing, and that means the bearish pattern is intact for now. After the fast dip under 17.50 last week, LCID rebounded to trade above the 17.75-18 support level again, and it has been spinning around above it the past few sessions. The bounce stalled near the 8day ema, 50day sma, and 20day sma cluster range, though, so the stock is still heavier than peers and in a susceptible spot if the market turns lower. The initial Sep16 put spread was rolled down last week when the stock broke down, but we will tighten the stop on the remainder of the trade to 19.50 moving forward (a rally above the 100day sma). 

PYPL is getting close to a breakout. Rising support from the 8day ema helped PYPL turn the corner higher last week, and after resetting above 100 on Friday, the stock has formed a tight base under the earnings day high (101.94). PYPL traded above 102 intraday today but was unable to sustain a run higher, though it did manage to finish marginally above the key level. If the stock can start to push up past 103 tomorrow (or later this week), momentum should build quickly, so we will be watching for an opportunity to scale back risk on the Sep16 call spread soon.

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 16, 2022