July 20, 2022

Today's Trade Ideas

Symbol: PARA

Style: Event

Strategy: Call Spread


Long Aug12 $27 call 

Short Aug12 $30 call

Action Area: $.70 - $.95

Comments: PARA is a bullish trade idea. While too early to fall into the ramp into the report zone, PARA nonetheless looks set to rally into earnings. The stock was knocked sharply lower in June along with most of the other streaming names, and it sank quickly below the previous year-to-date low and 24 before finally stabilizing. PARA has formed a month-long base above 24 now, and better-than-feared numbers from NFLX gave a solid boost to the stock today to put it at the top of the recent range. With open room to the 50day sma above (27.75), PARA should build momentum to the upside as traders look at the recent solid quarter in May and the blockbuster Top Gun Maverick as tailwinds. The Aug12 call spread will be targeting a run higher on the stock before the earnings release (8/04) to lock in money or reduce risk. The trade will use a 30-40% net debit loss as a stop.

Symbol: BJ

Style: Swing

Strategy: Call Spread


Long Sep16 $75 call

Short Sep16 $85 call

Action Area: $1.80 - $2.35

Comments: BJ is a bullish trade idea. Not all retail names are created equal right now, and recession-proof companies (at least those viewed to be by traders) are acting great. BJ (similar to peer COST) has been on a strong run throughout July, and it has pushed into the top of monthly resistance. The stock has stalled several times around 70 since it first hit it in November, with recent tests in April leading to a sustained pullback. Action is better on peers COST, DLTR, and DG right now, though, and BJ is coming off a strong quarter in May. With rising support from the 8day ema, the stock looks set up well for a near-term breakout, and momentum should build as it moves beyond 71. The  Sep16 call spread will be targeting an initial move to 73+ to begin to lock in money, and the swing trade will use a 40-50% net debit loss as a stop.

On The Radar

NIO has been treading water above 20 since it rolled over at the end of June, and while it is nice to see buyers continuing to defend the key level well, the lack of a move over the past few weeks has taken a toll on the Aug19 call spread roll up. NIO gives delivery numbers on the first of each month, so if the stock is still range-bound at the end of next week, we may roll the position down to options closer to the money to try and capitalize on the near-term event. The hard technical stop is still at 19.50 underneath. 

After a huge rip to 250+ last week and a quick reversal back down, STZ has been spinning around in the low-240s while it searches for direction. The fast move last week gave an opportunity to lock in money on the initial Aug19 call spread, so we can give the current call fly some room while the stock consolidates, but a break below 239 will put it below key moving average support and that will be our cue to exit.

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 14, 2022