July 27, 2022

Today's Trade Ideas

Symbol: EXPE

Style: Event

Strategy: Call Spread


Long Aug12 $105 call

Short Aug12 $111 call

Action Area: $2.00 - $2.50

Comments: We are going to circle back to EXPE for a bullish trade idea. A double dose of positive news yesterday and this morning is making for an interesting short-term setup on EXPE. Google cited strong travel search trends when they reported numbers after the close yesterday, and Hilton turned in a solid beat-and-raise this morning to kick off the Hotel reporting period. The recent bullish strategy on EXPE revolved around a breakout through 8day ema and 20day sma resistance in the mid-90s, and after doing so, the stock ran quickly to 105+. It cooled following that fast run, but it stabilized in the high-90s over the past week as support formed above the 8day ema and 20day sma. With those two moving averages providing a higher base, EXPE looks set up well for a rally into next week’s report (8/04), and momentum should build quickly following the positive headlines from Google and Hilton. The Aug12 call spread will be targeting a move higher over the next several sessions to lock in money or reduce risk, and the trade will use a 30-40% net debit loss as a stop.

Symbol: XLF

Style: Swing

Strategy: Long Call

Contracts: Sep16 $33 call

Action Area: $1.10 - $1.35

Comments: XLF is fast-developing bullish trade idea. The quarter was a mixed bag for Banks. Some names were disappointing and some names were better-than-feared, but the sector shrugged off the mixed results to post an impressive rebound. After putting in a new 52-week low on the day of JPM’s print (7/14), XLF rallied for a week straight to erase its losses from July and test the key 50day sma. It struggled to hold above that moving average initially, but it has formed a higher base at it over the past few sessions, and today’s strong rally sent it solidly past it to start a near-term breakout. On a clean move above 33.15 (last week’s high and the 6/10 gap high), XLF has a path to 33.75 to fill the gap from the June CPI reading, and the Sep16 call will be targeting an initial move to 33.75+ to begin locking in money. The swing trade will have a tight stop below 32.40 (under last week’s low) or a 40-50% net debit loss, whichever happens first.

On The Radar

DKNG had the breakout last week and the strong extension higher, and now it is showing encouraging signs. The stock rolled over along with the overall market this past week, but it found buyers above the 50day sma and 20day sma. DKNG caught a solid bid today and finished near the high of the session, setting it up for a run back to the high from last week and a potential test of the 100day sma. The Nov18 call spread has already been rolled up to lock in some gains, so we can be patient with the trade for now while it continues to develop. 

If CHPT was at a make-or-break level last week when it rallied into the top of downtrend resistance, then the stock is starting to show signs of breaking. After failing near 15 and rolling back below the 100day sma, CHPT has been under pressure this week and is struggling to hold the 50day sma. The previous two failures around 15 both led to fast reversals under 12, so a similar pattern could be playing out again here. The stock hasn’t moved enough to manage the Sep16 strangle yet, but there is plenty of time until expiration and an upcoming earnings report, so volatility should remain elevated for a while.

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 27, 2022