Quick check in before we start trading on the other side of the latest from Jerome Powell and his latest on rates and the economy.
We looked at AMZN, SOFI, and DKNG to start the week and two of the three are doing what I expected. SOFI is being stubborn.
CPNG has been a holding in the Savvy Trader portfolio nearly all of 2023 but it fell off a cliff, dropping over 7% on Wednesday while markets moved higher.
The trade looks to be over for CPNG.
And with that, let’s take a look at the charts.
First up is AMZN, which got the swing higher.
A big move up blasted through the October 12th high of $134.48 and sets up for more gains.
Targeting $139.96 next and $145.86 above that, I like the momentum.
We could get a quick retest of the $134.48 support level, which would present a buying opportunity for a short-term trade.
I still like considering buying the $136 strike calls and selling the $142 strike, both expiring November 24th.
The net cost should be around $2 per call spread contract (buying one call strike and selling a higher strike). The max gain is the difference between the two strike prices, which is $6 or a triple.
On the flip side, CPNG disappointed in a big way on Wednesday.
Dropping over 7% and the only news was that 3G Capital exited their position in the company.
Earnings is coming up and perhaps that provides a catalyst.
Just a strange day for CPNG and no doubt frustrating.
Waiting to see how shares react over the next few days, if they can recover quickly back above $16.37 I could stay interested.
Selling covered calls against CPNG has been lucrative.
And then there is DraftKings.
DKNG is bouncing around the lower end of its channel, finding support at $26.41 ahead of earnings after market close Thursday.
I continue to like a bounce here and move towards $30.32 which is the top of the range.
I think there is a chance it can move even higher if guidance is strong for the remainder of the year and into 2024.
Similar to AMZN, I like to use call spreads but for DKNG I would be trading this week or next week’s options heading into earnings.
Usually, I like to take the win ahead of earnings, which I mentioned previously, but DKNG did not cooperate. The trade now really is to hold through earnings.
There may be a nice day trade if shares start at the bottom of the range. If DKNG gaps up, we won’t get the opportunity to jump in ahead of time.
That said, I like how it is positioned and am looking for a nice pop.
Thanks for tuning in! I appreciate your support of A Trader’s Education and hope you have a great day!
If you enjoy the podcast, be sure to watch live every Sunday on YouTube where I host The Trading Triangle with friends Shaun and Kaye.
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This service is for general informational and educational purposes only and is not intended to constitute legal, tax, accounting or investment advice. These are my opinions and observations only. I am not a financial advisor.
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