By Dan Darrow

September 11, 2022

Today's Trade Ideas

Symbol: ABNB

Style: Swing

Strategy: Call Spread


Long Oct21 $125 call

Short Oct21 $130 call

Action Area: $1.90 - $2.35

Comments: ABNB is a bullish trade idea. The move lower in Oil this past week awoke buyers in many Discretionary names, including Travel-related stocks like ABNB. There has been a debate around the valuation of ABNB for a while, but one thing that is certain is that the company keeps delivering. Another solid report at the beginning of August helped keep momentum rolling higher at the time, but the rally stalled around key previous resistance at 123-124 and the 100day sma. ABNB pulled in later in the month along with the overall market, but it stabilized in the low/mid-teens, well above its August low. The turn higher this past week sent ABNB through the 20day sma and 100day sma, and it sets the stock up for a near-term test of the key 123-124 resistance range with a possible significant breakout above it. The Oct21 call spread will be targeting an initial move to 126+ to begin locking in money, and the swing trade will use a 40-50% net debit loss as a stop (no technical stop initially).

 Symbol: ORCL

Style: Event

Strategy: Strangle


Long Sep23 $79 call

Short Sep23 $84 call

Long Sep23 $72 put

Short Sep23 $67 put

Action Area: $1.65 - $2.05

Comments: ORCL is an interesting candidate for a strangle into earnings on Monday. One of only a couple of marquee names scheduled to report this coming week, ORCL should get extra attention when the company releases results Monday after the close. The company is coming off a strong beat-and-raise print in June, which saw the stock jump $8+ the following session. It went on a sustained run in July and August to test the 80 level and 200day sma, and after rolling over into the end of August, it has stabilized around 74-75. The weekly Sep16 straddle is pricing in a ~$4.75 move for next week, but the stock has seen larger swings around earnings over the past year, including last quarter’s 12%+ pop. The Sep23 strangle will go out one week extra to provide some insurance in the event the stock doesn’t move enough immediately to reward options, and the strategy will be targeting a move of $5+ to lock in money. The trade will have no stop until after the report comes out, so be sure to plan your size accordingly.

On The Radar

This past week may have started similar to how it finished the week before (with selling), but the script flipped quickly by Friday, as we have seen countless times year-to-date. Three sessions of buying in a row, including a sizable gain on Friday, put QQQ and SPY back above the key 8day ema, as well as the 50day sma and 100day sma too. While the developing bounce now appears to have room higher, the looming CPI report on Tuesday morning will have a huge impact on the action the remainder of the week. With the CPI coming up and the FOMC rate decision the following week, volatility is going to be significantly elevated in the short term, so we need to be nimble with our trades. Instead of rolling and trying to catch multiple legs of move, it may be smarter to lock in trades quicker until there is more clarity post-FOMC day. The QQQ/SPY hedges are close enough to the money to be in play for the CPI, so they do not need to be adjusted, and we can reevaluate the hedges again pre-FOMC on 9/21.

DKNG pulled back a little further than expected, but as it turns out, the move led to a perfect backtest of the key 15 level. DKNG rolled into 15 two weeks ago to retest the huge resistance level from April through August, and the stock found buyers right at it this past week. With previous resistance turning into support (and rising support from the 50day sma as well), DKNG started to rebound ahead of the weekend, and now there is a good reason to roll down the Nov18 call spread. We will see where DKNG opens and trades during the first 30–45 minutes on Monday, then look to roll down the position to something closer to the money (with a possibly wider profit window). 

We are going to tighten the stop on HYG. After a great move lower from mid-August, HYG has started to find buyers near the June/July support range. HYG has bounced both times it sank below 74 the past couple of weeks, and the rally Wednesday into Friday has carried it back up above 75.50 and into a key moving average congestion area. With the 50day sma, 20day sma, and 100day sma all in ~$1 range above, it will be important for the ETF to hold below 76.75, or the bearish near-term thesis will no longer stand, so that will be the technical stop moving forward for the Oct21 put spread roll down.

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 August 12, 2022