By Dan Darrow

September 08, 2022

Today's Trade Ideas

Symbol: WDAY

Style: Swing

Strategy: Call Spread


Long Oct21 $175 call

Short Oct21 $185 call

Action Area: $2.40 - $2.90

Comments: WDAY is a bullish trade idea. WDAY was a victim of bad timing. The company turned in a solid report on 8/25 and gapped sharply higher the following morning to probe the previous high from August around 179-180. That session was the date of Powell’s Jackson Hole speech, however, and the entire market tumbled lower following the statement, including WDAY, which slid lower to erase a majority of the earnings-related gain. The stock finished back below the key 100day sma that session and has struggled to get back above it since then, though a near-term bullish pattern is emerging to signal higher prices are coming. WDAY found buyers pre-earnings and post-earnings at the 50day sma, and the rising moving average has formed an increasingly tight pennant on the chart between it and the 100day sma above. The stock’s rally on Wednesday put it right at the 100day sma, and it began to push past it today, setting up a near-term breakout. The Oct21 call spread will be targeting an initial move to 175+ to begin locking in money, and the swing trade will have a tight stop below 156 (under the 50day sma) or a 40-50% net debit loss, whichever happens first. 

Symbol: AMZN

Style: Swing

Strategy: Call Spread


Long Oct14 $133 call

Short Oct14 $139 call

Action Area: $2.20 - $2.80

Comments: AMZN is a bullish trade idea. It took a strong quarter and a solid guide to finally send AMZN decisively through 125 resistance, and the mega-cap name continued to surge the following two weeks post-earnings to close the April gap (145.93). AMZN’s rally paused right at that gap and the 200day sma, though, and it began to roll over later in August as the overall market tumbled lower. AMZN’s slide put it back into the mid-120s last week to backtest the 125 resistance level, and it has started to stabilize above key level this week as the 50day sma provides support underneath. It closed slightly above the 8day ema today, and a clean break of the moving average should start a near-term run to the mid-130s. The Oct14 call spread will be targeting an initial move to 134+ to begin locking in money, and the swing trade will have a tight stop below 124 or a 40-50% net debit loss, whichever happens first.

On The Radar

Tomorrow is weekly Sep09 expiration, and there are no positions set to expire. It may end up being a busy morning after a volatile few sessions, so be on the lookout for updates early!

ICPT has thrown a curveball for the Oct21 strangle. While it is off the low of the week, ICPT’s drop from the initiation last week has sent the bear portion of the strangle well into the money, and it has shifted the risk much more heavily to the downside. With expectations for a drop possibly only to the low teens on disappointing data, it is also hard to roll down the contracts to something that makes sense risk/reward-wise. If the stock drops to ~16-16.50 again over the next few sessions, the plan may be to book the gain on the put spread and leave the call spread open as a low debit bullish play on the data release. Stay tuned for an update here.

CHPT has had back-to-back strong sessions to clear a recent chop zone. Minus a fast run on the day of its results last week to ~17, CHPT has been stuck in a range between 14 and 16 since the middle of August. Yesterday’s rally put it at the top of that range, and today’s 6%+ move made for a clean breakout. The Sep30 call spread roll up moved into the money late, so we will be watching for continuation higher tomorrow for a chance to reduce more risk.

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 September 08, 2022