Scott Bauer
Professional Options Trader
CEO of Prosper Trading Academy
CEO of Prosper Trading Academy
Watchlist Date: (5.13.2024)
Scott Bauer's Top 3 Options Picks
Options Picks To Keep on Your Radar THIS Week
Overview:
All eyes are on Wednesday's scheduled U.S. retail sales and consumer price index (CPI) reports. Both readings have the potential to move the needle significantly in terms of Federal Reserve interest rate cut expectations, especially after those odds ticked up recently following the central bank's latest monetary policy decision and favorable labor market data.
The earnings season will continue to chug along next week, with investors receiving results from retail titans Walmart (WMT) and Home Depot (HD). Other notable names that will report include Chinese e-commerce firm Alibaba (BABA) and networking giant Cisco (CSCO).
Also of interest next week will be 13F filings - regulatory disclosures by major funds of their quarterly equity ownership changes.
Finally, the artificial intelligence race could see some notable developments, with Microsoft-backed (MSFT) OpenAI expected to announce some updates on Monday, and Alphabet's (GOOG) (GOOGL) Google hosting its annual developer conference.
Here are some names we will be focusing on this week:
Options Pick #1: Carvana Co. (CVNA)
Description:
Carvana Co., together with its subsidiaries, operates an e-commerce platform for buying and selling used cars in the United States.
Its platform allows customers to research and identify a vehicle; inspect it using company's 360-degree vehicle imaging technology; obtain financing and warranty coverage; purchase the vehicle; and schedule delivery or pick-up from their desktop or mobile devices.
What we are looking for:
CVNA released earnings on 5/2 and the lows from its move up on earnings have held. I am watching for a Swing Break Out signal above $121.76. If we can rally above that I would consider a bullish play with a call vertical spread targeting the $130 strike.
Options Pick #2: Akamai Technologies, Inc. (AKAM)
Description:
Akamai Technologies, Inc. (AKAM) provides cloud computing, security, and content delivery services in the United States and internationally.
The company offers cloud solutions to keep infrastructure, websites, applications, application programming interfaces, and users safe from various cyberattacks and online threats while enhancing performance.
It also provides web and mobile performance solutions to enable dynamic websites and applications; media delivery solutions, including video streaming and video player services, game and software delivery, broadcast operations, authoritative domain name system, resolution, and data and analytics; and cloud computing services.
What we are looking for:
AKAM had earnings after the bell on Thursday. It was not well-received. Historically, when AKAM experiences a move like this, it quickly rebounds. This setup has occurred four times in the past two years and each time AKAM has rebounded. I would approach this with either a call diagonal or with a credit put spread using the $90 strike as my short put.
Options Pick #3: American Tower (AMT)
Description:
American Tower is one of the largest global REITs. It is a leading independent owner, operator and developer of multi-tenant communications real estate with a portfolio of over 224,000 communications sites and a highly interconnected footprint of U.S. data center facilities.
What we are looking for:
AMT has rallied off of its lows after a favorable earnings report in late April. It is now at resistance right below the confluence of the 50-day and 200-day moving averages. It is also set up for an Inside Bar entry. If we break above $188.55 I would consider a bullish play using a debit call diagonal to capture this upside momentum.
Have a great trading week! Keep your risk in check and stay disciplined!!!
- Scott Bauer
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