DailyPlay

The bullish DailyPlay for Friday, September 18th is CSX Corp (CSX). CSX has experienced a 5.8% gain over the past month and its 1M and 6M trends turned bullish on August 4th. 

Fundamental View

• Made significant margin expansion with a 12% reduction in headcount.
• Good history of effective cash-flow management during recessions
• Earnings Oct 21st in 33 days

Technical View – IV Rank 15%

• Recently pulled back to 20 D EMA and bounced higher with strong momentum
• Bullish 1M and 6M trend with strong relative strength
• Debit Spread risks just 3.5% of the stock’s price to play for a breakout

The bullish DailyPlay for Tuesday, September 15th is Starbucks Corp (SBUX). SBUX has experienced a 7.5% gain over the past month and its 1M and 6M trends turned bullish on August 5th and August 10th respectively. 

Fundamental View

• Lower commodity input costs (coffee) is expected to aid in margin recovery from 6.9% in 2020 to 16% in 2021
• Gradual reopening of stores globally with digital partnership with Alibaba to drive China growth. 
• Earnings Oct 29th in 45 days

Technical View

• Price has pulled back to $84 area of support and has bounced higher from this level.
• Strong relative strength, technical score (8 out of 10)
• Bullish 1M and 6M trend

Bullish – GM – $30.46

Catch OptionsPlay’s Chief Strategist, Tony Zhang on CNBC, Options Action every Friday at 5:30 PM EST!

Market Outlook:
We saw a slightly less volatile week in the equity markets, ending lower but lacked the acceleration from the previous week. The VIX also retreated over the week, and Put Call ratios eased from extreme levels. While there are still downside risks, the QQQ has held a significant support level at $270 on Friday. Our base case for next week is for the QQQ to stabilize and hold the $270 support level, however a break below $270 support on the QQQ would bring $250 targets to the downside.

Watch Tony’s GM Trade Video on CNBC

GM Trade Idea:
On CNBC’s OptionsAction show on Friday, Tony Zhang looked at GM the longer term opportunity with electric vehicles. GM and Nikola have dominate the news cycle, but we want to focus on the longer term opportunity. Whether Nikola is a scam or not, its impact on GM in the long run is fairly limited. Our focus should be on GM’s vision for developing alternative powertrains for their vehicles. With 25 electric vehicles planned for launch in their portfolio, double what their competitors have planned, presents a much large opportunity for GM in the future of electric vehicles. And if Nikola becomes a success, GM provides a much safer way to play for that upside. Expecting GM to trade higher, Tony is selling an Oct $30 Put @ $1.50 Credit. 

We’ve structured this trade in OptionsPlay so you can analyze and view this trade along with the supporting technical chart at your convenience. 

Bullish – NVDA – $462.56

Catch OptionsPlay’s Chief Strategist, Tony Zhang on CNBC, Options Action every Friday at 5:30 PM EST!

Market Outlook:
The S&P 500 opened this past week within a couple of points of its all-time high but failed to break higher. Investors have continued to seek upside exposure despite overbought conditions, exhausted markets and extreme valuations with the inherent belief that the Federal Reserve will prop up financial markets. We saw fixed income markets sell-off this week, perhaps a warning sign that investors see risks in this thesis. Our base case remains that markets will continue to grind higher until a catalyst bursts this “bubble” as market breadth narrows. With China and US tensions, vaccine trials and stimulus bills, there are no shortage of potential catalysts. 

Watch Tony’s NVDA Trade Video on CNBC’s Options Action

NVDA Trade Idea:
On CNBC’s OptionsAction show on Friday, Tony Zhang looked at NVDA and the upcoming earnings event next week. With a strong gaming upgrade cycle expected this fall after the release of XBOX and PS5 consoles, will offset softer cloud computing revenues. NVDA has one of the strongest relative performance of any technology stock and estimate revisions point to a potential beat. Expecting NVDA to trade higher on earnings, Tony is selling a Sept $450/$415 Put Vertical @ $12.00 Credit. As of Friday’s close, these puts were trading for $12.00 Credit.

We’ve structured this trade in OptionsPlay so you can analyze and view this trade along with the supporting technical chart at your convenience.