By Dan Darrow
September 07, 2022
Today's Trade Ideas
Symbol: CSIQ
Style: Swing
Strategy: Call Spread
Contracts:
Long Oct21 $48 call
Short Oct21 $55 call
Action Area: $2.15 - $2.75
Comments: CSIQ is a fast-developing bullish trade idea. Solar remains one of the best sectors in the market, and many top names in the group have formed bullish patterns. CSIQ has had a methodical move higher since the middle of July, with the largest acceleration coming after a strong report on 8/18. The sharp pop that day sent the stock briefly above 47, but two sessions later, it was back below 40 to close the earnings gap. Buyers came in quickly around 40, however, and the stock rebounded to reset the 8day ema soon after. CSIQ has now formed a several-week consolidation around 45, with rising support from the 8day ema and 20day sma helping to set up a near-term breakout on the stock. Strength across the Solar space should lead to a quick run to the 50s once CSIQ clears 47.75, and the Oct21 call spread will be targeting an initial move to 49+ to begin locking in money. The swing trade will have a tight stop below 43.25 (under the 20day sma) or a 40-50% net debit loss, whichever happens first.
Style: Swing
Strategy: Call Spread
Contracts:
Long Oct21 $75 call
Short Oct21 $80 call
Action Area: $1.60 - $1.95
Comments: GE is a bullish trade idea. GE had a surprisingly solid July report. After back-to-back disappointing quarters, GE delivered a solid (albeit mixed) quarter in late July, leading to the start of a sustained run on the stock. The print sent GE back through the 50day sma, and a couple of weeks later, the stock reclaimed the 100day sma, removing the two biggest levels of resistance year-to-date. The rally stalled around 80 a few weeks ago, and the stock rolled over along with the market, but buyers stepped in to defend the 50day sma and key support from May around 71-72. The stock’s strong session today put it back at the 100day sma and it is setting it up for a near-term bounce, with an open path to the 20day sma (76.54) once it clears 73.75. The Oct21 call spread will be targeting an initial move to 75.50+, and the swing trade will have a tight stop below 70.50 or a 40-50% net debit loss, whichever happens first.
On The Radar
It took the calendar changing to September (and traders coming back from their vacations) for volume to pick up on BIIB options, and the volume has been steadily increasing on the Oct21 contracts this week. With bid/ask spreads tightening and volume getting better, there should be an opportunity to open the strangle tomorrow (or Friday). As a reminder, the action area for the strangle is $4.00 - $5.00. Data should be out by the end of September according to the company, so the Oct21 options will give a few weeks of insurance if the data surprisingly gets delayed.
Retail had a strong session today, and FL got a much-needed boost. FL had been dripping lower over the past week, and Monday’s early slide put it around 35 and the key 200day sma. It hammer reversed Monday, though, and today’s rally got it back above the 8day ema, with the two-day pattern potentially starting a near-term turn higher finally. FL will need to clear 37.50 to build momentum, but once it does, the earnings day high should come quickly. The plan will be to remain patient with the Oct21 call and drop the initial target range down to 39+ (from the original 39.50+).
Open Positions
Trader Author Portfolio Holdings
**As of 4pm ET September 07, 2022
