By Dan Darrow
September 20, 2022
Today's Trade Ideas
Strategy: Call Spread
Long Nov18 $42 call
Short Nov18 $47 call
Action Area: $1.25 - $1.65
Comments: LVS is a bullish trade idea. One thing for LVS since mid-March has been consistent: whenever the stock gets to 40, it fails. That looks set to change. After multiple tests of 40 over the past six months and multiple failures, LVS is beginning to make a sustained push into the key resistance level following strong recent action, and a major breakout is imminent. With loosening covid restrictions in Macau and money flowing into Discretionary names, LVS and the other Casinos have seen steady buying interest over the past week, and those tailwinds should help support a near-term run into the mid-40s once the stock decisively clears 40 resistance. The Nov18 call spread will be targeting an initial move to 42+ to begin locking in money, and the swing trade will have a tight stop below 37.50 (a failed breakout) or a 40-50% net debit loss, whichever happens first.
Strategy: Put Spread
Long Oct21 $157.50 put
Short Oct21 $150 put
Action Area: $2.15 - $2.65
Comments: TGT is a bearish trade idea. WMT may have followed up its mid-quarter warning with a decent report and guide in August, but TGT did not. After rallying for the first half of August to 180+, TGT reversed quickly back to the 160s following its disappointing print on 8/17, and the stock continued to remain heavy into the start of September. Buyers eventually stepped in at the 50day sma, leading to a solid bounce two weeks ago into the mid-170s and the 100day sma, but similar to the overall market, TGT has since rolled back down to give up the gains. Today’s drop put the stock below the key 50day sma and it opens the chart up for a sustained move lower, with the Oct21 put spread targeting an initial move to <156 to begin locking in money. The swing trade will use a 40-50% net debit loss as a stop.
NOTE: Volatility will be high tomorrow afternoon following the FOMC rate decision and press conference from Powell, so we will hold off initiating the LVS and TGT trades until after 3:00 pm ET to make sure the setups are still valid.
On The Radar
We spent a good portion of yesterday’s Option Session discussing the FOMC day setup, but if you weren’t able to make it, I put together a Youtube video today breaking down the priced in move and levels to watch on QQQ/SPY for tomorrow, so be sure to check that out before the fireworks start at 2:00 pm ET.
ICLN is at a big level. Weakness has crept into leading Green Energy names, and ICLN has started to roll into key two-month support. ICLN’s drop today put it around the 21.35 recent support range, and it sets up an important session tomorrow. If ICLN holds, it should see a quick move back to 22+, similar to the move from earlier in September. If it loses 21.35, though, it could pick up momentum into the July gap, and the technical stop for the Dec16 call is close below at 21. This will be on close watch tomorrow.
Similar to ICLN, BE is at a big level. The Fuel Cell name had been hanging in great until today, with the 5%+ drop knocking it back to key recent support. BE closed right above the 23.50 support level and slightly above the 50day sma (23.27), and it needs to bounce quickly, or it could start a material breakdown. The Oct21 call spread is at the net debit stop loss range, though, so we will need to see an uptick pre-FOMC to continue to hold the position. This will be on close watch tomorrow morning.
Trader Author Portfolio Holdings
**As of 4pm ET September 20, 2022