By Dan Darrow
September 06, 2022
Today's Trade Ideas
Symbol: TSLA
Style: Swing
Strategy: Call Spread
Contracts:
Long Oct07 $285 call
Short Oct07 $295 call
Action Area: $3.50 - $4.10
Comments: TSLA is a bullish trade idea. There is never a dull day of news when it comes to Elon and TSLA, though there are plenty of dull periods of action on the latter’s stock. The run into the recent split on TSLA coincided with market-wide strength, and it nearly helped the stock reset above the key long-term 200day sma before momentum cooled. Selling eventually caught up to TSLA two weeks ago, and the early drop last week sent the stock rolling into the 100day sma and 50day sma for the first time since July. The stock stabilized nicely at those moving averages into the end of the week, forming a few-day base in the low-270s and setting up a near-term bounce on the leading name. On a turn higher, TSLA should have a clear path to the 290s once it clears the 8day ema, and the Oct07 call spread will be targeting an initial move to 286+ to begin locking money. The swing trade will have a tight technical stop below 265 (under last week’s low) or a 40-50% net debit loss, whichever happens first. The call spread will go through the beginning of October and TSLA’s delivery numbers, so option pricing should remain relatively firm even if the stock turns lower.
Style: Swing
Strategy: Put Spread
Contracts:
Long Oct21 $100 put
Short Oct21 $95 put
Action Area: $1.45 - $1.90
Comments: COF is a bearish trade idea. COF is a clear laggard among the Financials, and it is one of the worst-acting Credit Card names. The stock recovered from its weak July report thanks to a risk-on environment in August, but once momentum cooled across the market and stocks began to roll over, COF was one of the first Credit Card names to start turning lower. COF has slid into the 102 level to retest key support from June/July, and with steady declining pressure from the 8day ema, it looks set up well for a test of the June low (98.54) and a near-term breakdown underneath it. The Oct21 put spread will be targeting an initial move to <99.50 to begin locking in money, and the swing trade will use a 40-50% net debit loss as a stop.
On The Radar
ENPH had a great start to the week. A small green open turned into a big green morning as ENPH ripped into the high-290s. The stock stalled before clearing 300, though, and it pulled back a bit in the afternoon to finish off its best level of the session. Today’s rally puts ENPH in a great position to make a sustained run through 300 if the market can firm up soon, and as a leader in the Solar sector, it should get a lot of attention as it probes the top of the month-long bull flag. While the stock isn’t at the initial target zone yet, the Oct21 call spread has gained substantially, so it may be smart to roll up sooner, especially if there are signs it may take ENPH a while longer to clear key resistance. Keep an eye out for an update on this position the next couple of sessions.
Z has formed an increasingly tight consolidation under the 50day sma over the past week and is nearing a make-or-break point for the stock. With the 20day sma close to crossing below the 50day sma, pressure should begin to build on the downside, and a clean break of 33 should start momentum building for a move to ~30. Because of the way the pattern has developed, we can also tighten the stop on the Oct07 put spread to 35.50. That would be a reset of the 50day sma and 20day sma, and it would change the bearish thesis.
Open Positions
Trader Author Portfolio Holdings
**As of 4pm ET September 06, 2022
