July 31, 2022

Today's Trade Ideas

Symbol: CRM

Style: Swing

Strategy: Call Spread


Long Sep16 $190 call

Short Sep16 $200 call

Action Area: $3.10 - $3.75

Comments: CRM is a bullish trade idea. The Enterprise Software stocks were knocked lower a few weeks ago following analyst comments and a segment on CNBC with the CEO of NOW. CRM sank back near its 52-week low over a weak three-day stretch, but buyers stepped in under 160 to prevent a material move to the downside. Software stocks have recovered nicely over the past couple of weeks, and the group got a big boost this past week when MSFT delivered a solid forward guide. CRM put together a strong rally Wednesday through Friday, finishing the week just under the high from July and above the key 100day sma. The stock is setting up for a near-term breakout now, and there is an open path to the June high (192.67) once momentum kicks in. The Sep16 call spread will be targeting an initial move to 189+ to begin locking in money, and the swing trade will use a 40-50% net debit loss as a stop.

Symbol: FDX

Style: Swing

Strategy: Call Spread


Long Sep9 $235 call

Short Sep19 $245 call

Action Area: $3.00 - $3.70

Comments: FDX is a bullish trade idea. A solid beat and a solid guide from UPS this past week led to an initial drop, but like many names that were hit on earnings, the dip was bought quickly. FDX followed UPS in price action on the day of its results as it sank into the 50day sma, but similar to UPS, it snapped nicely off that level during the session, and back-to-back-to-back rallies the next three days put the stock at a key spot heading into the upcoming week. With FDX pushing through the 200day sma and July resistance around 230, a near-term breakout is brewing as Industrials continue to find buyers, and there is a clear path up to the 240+ once momentum begins to build. The Sep9 call spread (Sep16 options are only listed in $10 increments) will be targeting an initial move to 238+ to begin locking in money, and the swing trade will use a 40-50% net debit loss as a stop.

On The Radar

Our next option session is tomorrow (8/01), and we have lots to catch up on. The FOMC rate decision is behind us, but movement is beginning to open up as earnings take center stage, and it is creating a lot of interesting scenarios across the market. We will spend time breaking down the action and how to position for the next couple of weeks, including what to watch for on the big reports this coming week. I hope you all can make it!

Earnings delivered (for the most part), and the FOMC delivered (for the most part), and that made for a great week for bulls. Indices wrapped up a strong five-day stretch with a solid session Friday, with both QQQ and SPY rallying to reclaim their 100day sma. It was the first close above that moving average on QQQ since January (since early April for SPY), and it was driven heavily by the performance of the mega-cap Tech names. Momentum remains strong, and with the mega-caps acting well, it may continue to remain strong moving forward, but a pause/pullback in the near term would be welcome, as it would give the indices an opportunity to digest the large recent gains. The mix of trade ideas needs to start to shift in favor of the bull side as QQQ and SPY reset key moving averages, but we will continue to focus on quality bear patterns and take shots on earnings/event trades as they pop up. 

RIVN will be on close watch tomorrow. A strong session Thursday and a late pop on Friday put the stock above the 100day sma for the first time, and it removes a key near-term area of resistance. If RIVN can build on the momentum on Monday and push past 35, the stock should begin to accelerate higher quickly. We will be looking for an opportunity to scale back risk soon, though it may make more sense to wait and see if it can clear 35 with volume first before managing the Sep16 call spread. 

Weaker guidance from LC weighed on peer UPST this past week, and it helped the latter remain in a steady downtrend even as the overall market stormed higher. UPST closed Friday flat, and it finished the session well under the 8day ema, too, so momentum is still squarely on the downside. The longer the stock fails to bounce, the more likely it is to turn lower once the market pauses, so the Aug19 put fly still has a great shot to work in the near term. We can be patient with the trade for now, but earnings are coming up soon on UPST (8/08), so it would be better if the stock starts making progress lower early this coming week. 

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 29, 2022