July 18, 2022

Today's Trade Ideas

Symbol: EXPE

Style: Swing

Strategy: Call Spread


Long Aug19 $98 call

Short Aug19 $105 call

Action Area: $2.45 - $2.90

Comments: EXPE is a fast-developing bullish trade idea. Travel-related stocks were crushed over the past couple of months, and after putting in a new all-time high in February, EXPE lost >50% to wipe out all of its gains from 2021 and 2022. EXPE broke below 100 in mid-June following the hot CPI report, and it has struggled to reset above that level since. Steady pressure from the 8day ema has pushed it into the low 90s, while the 20day sma just recently caught up overhead. Travel-related stocks were a bright spot today, however, and EXPE traded above both key moving averages during the session, though only finished above the 8day ema. With reversals taking shape across the group, EXPE looks set up well for a fast run back to triple digits, and the Aug19 call spread will be targeting an initial move to 98+ to begin locking in money. The swing trade will use a tighter 30-40% net debit loss as a stop.

Symbol: PLUG

Style: Swing

Strategy: Long Put

Contracts: Aug19 $16 put

Action Area: $1.40 - $1.70

Comments: PLUG is a bearish trade idea. A major setback to the administration’s green energy plans roiled many names on Friday, though the drops across the Hydrogen Fuel Cell names were some of the steepest. PLUG finished the session down nearly 13% and closed well below key moving average support. Having lost the 8day ema, 20day sma, and 50dy sma, PLUG now has a path to the June low (13.90), and sentiment may continue to deteriorate ahead of earnings (tentatively scheduled for 8/8) considering the downbeat print the company had in May. The Aug19 put will be targeting an initial move to <14.25 to begin locking in money, and the swing trade will have a tight stop above 17.50 ( a reset of moving average support) or a 40-50% net debit loss, whichever happens first.

On The Radar

Reports first mentioned SGEN as a potential target for MRK in mid-June, and more recent headlines mentioned that the companies wanted to wrap up a deal by the time each company reports earnings at the end of July. Late Friday, though, another headline broke, saying that an official deal may take longer, and both MRK and SGEN traded lower today. MRK (and other Pharma names) may have also been under pressure due to potential drug pricing legislation moving around the Senate. MRK’s drop today put it below the 8day ema, and it should start momentum building to the downside, so we will be watching for a move to <91.25 to begin scaling back risk on the Aug05 strangle. 

GTLB acts great. The Software stock survived a pullback last week without major damage (compared to some peers), and it has recovered quickly. The stock popped this morning near 60 and held onto gains during the afternoon, putting it in a great spot to potentially break the key 60 area of resistance tomorrow (or this week). With the 20day sma turning into a sizable area of support, we will tighten the stop on the Aug19 call spread roll up to 53.50. A break of that level would put the stock below the 20day sma, and it could start a move into the 40s.

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 July 18, 2022