August 10, 2022

Today's Trade Ideas

Symbol: PYPL

Style: Swing

Strategy: Call Spread


Long Sep16 $100 call

Short Sep16 $110 call

Action Area: $3.15 - $3.75

Comments: PYPL is a bullish trade idea. A strong run into its print last week put PYPL at an interesting spot technically. The stock closed the day of its report at the 100day sma, setting it up for a potential break of the key moving average if earnings delivered. Well, PYPL’s solid quarter, large buyback, and vote of confidence from Elliott Management was the right recipe for bulls, and the stock saw a large pop to 100+ following the results. It pulled back the following few sessions but began to stabilize around 95, and today’s rally started a turn higher as the fast-moving 8day ema begins to close in underneath. On a clean break of 100, PYPL should start building momentum for a run to 108.25 (unfilled gap from 4/12), and the Sep16 call spread will be targeting an initial move to 103+ to begin locking in money. The swing trade will have a tight stop below 94 or a 40-50% net debit loss, whichever happens first. 

Symbol: EXPE

Style: Swing

Strategy: Call Spread


Long Sep16 $115 call

Short Sep16 $120 call

Action Area: $1.40 - $1.80

Comments: We are going to circle back around to EXPE for another bullish trade idea. We’ve been active with EXPE over the past month, with two bullish trades revolving around trying to capture a rally on the stock before the company reported. The second of the two ended up being a wash as the stock struggled to sustain momentum above the 100 level, but the consolidation that formed under the 50day sma pre-earnings has lasted after the print, and the tight setup is nearing a resolution point. A solid beat-and-raise failed to put EXPE firmly above the 50day sma, but the stock began to make progress above that key moving average today, and the strong close put it right at the top of its recent range. On a clean break of 110, EXPE should begin building momentum for a run into the mid-teens, with an unfilled gap from 6/10 at 115.16 a clear upside target. The Sep16 call spread will be targeting an initial move to 114.50+ to begin locking in money, and the swing trade will use a 40-50% net debit loss as a stop.

On The Radar

SNAP had a false start above the 8day ema on Monday, but after sliding on Tuesday and rebounding today, the stock is back in business. Today’s strong session put SNAP above the 8day ema again, and with near-term resistance removed, the stock should begin to build momentum for a run into the earnings gap (>11). The lack of a major move since the Sep16 strangle was initiated means we have not adjusted the trade yet, but if SNAP starts to push towards 11, it should give us a nice opportunity to start scaling back risk. With today’s high at 10.87, a pop to 11 may play out quickly, so keep an eye out for an update on this trade soon. 

GM acts great. The break of the 50day sma led to a strong run into the 100day sma last week, and now after several sessions of digestion under the latter, the stock is prepping for another leg higher. GM pushed through the 100day sma today and closed solidly above it, and there is an open path to ~40 now to retest the early June high (39.64). The Sep16 call spread has already been rolled up once, and we will be watching for a move to 39+ to roll up again. The stock is emerging out of a long downtrend, so it makes sense to ride the momentum on the pent-up rally.

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 10, 2022