By Dan Darrow
September 19, 2022
Today's Trade Ideas
Strategy: Call Spread
Long Oct28 $105 call
Short Oct28 $111 call
Action Area: $1.95 - $2.55
Comments: GOOGL is a bullish trade idea. GOOGL is at a huge level. Similar to its mega-cap peers, GOOGL has been under pressure since the release of the CPI report last week, and the sustained slide lower over the past few sessions has sent the stock into the 52-week low. The big hammer reversal on 5/24 started a multi-week rebound on the stock, and it ended up marking the low of the year (101.88) until last week. GOOGL has traded below that level but is still attempting to stabilize around it, and the oversold conditions following the sharp drop mean a near-term bounce is likely. In addition to the May low, GOOGL has a sizable area of support close underneath at 100 (February to April 2021), which should also help set a temporary floor on the stock. The Oct28 call spread will be targeting a short-term rally back to 105.25+ to begin locking in money, and the swing trade will have a tight stop under 99.75 or a 40-50% net debit loss, whichever happens first.
Strategy: Call Spread
Short Oct21 $750 call
Action Area: $3.00 - $3.85
Comments: REGN is a bullish trade idea. REGN was a large-cap Bio standout two weeks ago following strong data from a key pipeline candidate. The stock rocketed higher by >$120 on the data, marking an unusually large move for a company of its size, and it continued to follow through to the upside the next session to put in a new 52-week high. REGN has rolled over from the 750+ high, but it is beginning to stabilize around 700 while the fast-moving 8day ema catches up underneath. The new bull flag forming is setting up another leg higher in the short term, and the Oct21 call spread will be targeting an initial move to 740+ to begin locking in money. The swing trade will use a 40-50% net debit loss as a stop.
On The Radar
BURL keeps bouncing around 137. BURL tested the 137 level early Thursday morning and held, sank underneath it off the open on Friday and quickly rallied, then slid into again today but bounced. With buyers beginning to show up more consistently around that level, we will adjust the target range to ~137 now to reduce risk on the Oct21 put spread. The stock is still below all moving averages and just off its 52-week low, though, so the overall bearish pattern is still intact.
GM has been impressive. Throughout the CPI-related selloff across the market, GM has remained in its recent uptrend, with multiple dips to the 20day sma over the past week aggressively bought. GM opened under that key moving average again this morning and had a big red to green reversal, finishing the session up >3% and within striking distance of the 42 strike of the Oct21 call spread. We will be watching to see if the stock can string together another run tomorrow to test 42, which would give a nice opportunity to scale back some risk on the swing trade ahead of the FOMC meeting on Wednesday.
Trader Author Portfolio Holdings
**As of 4pm ET September 19, 2022