Trade Alert: Top Names
Bullish options bets on two of our newest top names.
Two New Top Names
In order for a stock to be considered for our system’s top names, it needs three things:
A 6-month track record.
Options traded on it.
A long-term proxy, if it hasn’t been around at least 10 years.
Over the weekend, I manually added long term proxies for a few dozen stocks in our system that didn’t have them, including one that went public earlier this year. In each case, the long term proxy was an industry peer.
On Monday night, when our system ran the numbers on all the thousands of securities in its universe, two of the new additions made it into our top ten. Today, we’re going to place bullish options bets on both, extending out past their next earnings releases in February.
If we’re right, our maximum possible gains will be about 200% on one of these, and about 300% on the other; if we’re wrong, our maximum possible losses will be 100% in both cases.
Details below.
Top Names Trade #1
The stock is Reddit (RDDT 0.00%↑), and our trade is a vertical spread expiring on February 21st, buying the $160 strike calls and selling the $165 strike calls, for a net debit of $1.60. The max gain on 3 contracts is $1,020, the max loss is $480, and the break even is with RDDT at $161.60. This trade hasn’t filled yet.
Top Names Trade #2
The stock is Upstart Holdings (UPST 0.00%↑), and our trade is a vertical spread expiring on April 17th, buying the $87.50 strike calls and selling the $90 strike calls for $0.60. The max gain on 7 contracts is $1,330, the max loss is $420, and the break even is with UPST at $88.10. This trade hasn’t filled yet. This trade filled at $0.54 on 12/30/2024.
Exiting These Trades
Assuming these trades fill, for the RDDT spread, I’m going to set a GTC order to exit at about $4.75; for the UPST spread, since that one expires a couple months after the stock’s earnings release, I’m going to set a GTC order to exit at about $2. In both cases, I’ll lower the prices, if necessary, as we approach expiration.