Trade Alert: Top Names, Crypto, and AI
Bullish options bets on our #1 name from Friday, plus 3 more speculative bets.
Four Bullish Trades
Today, we’ve got four bullish options trades:
A top names trade. This stock was the #1 name in our daily ranking on Friday. It’s a software platform for advertising with an AI angle (using AI to match users and ads). It beat earnings on top and bottom lines last month, but has pulled back since (all else equal, the empirical data tracked by Portfolio Armor’s securities ranking algorithm suggests short-term pullbacks tend to be bullish). If we’re right on this trade, our max gain would be about 200%, and our max loss would be 100% if we’re wrong.
A speculative crypto-related trade. A successful trader I follow on X thinks this stock has a shot of doubling as Bitcoin makes new highs. Our trade is a bet on the stock climbing 50% over the next month. If we’re right, our max gain would be about 500%, and if we’re wrong, our max loss would be 100%.
An AI-related post-earnings trade. Another software stock with an AI angle. This one beat earnings on top and bottom lines recently, and looks like it could keep climbing in the near term. Our max upside on this one is uncapped, and our max downside is 100%.
An AI-related earnings trade. This one’s a hardware stock. Our max upside on this one is about 200%, and our max downside is 100%.
Details below.
Today’s Top Names Trade
The stock is AppLovin (APP 0.00%↑), and our trade is a vertical spread expiring on February 21st, buying the $380 strike calls and selling the $390 strike calls, for a net debit of $3.15. The max gain on 2 contracts is $685, the max loss is $315, and the break even is with APP at $383.15. This trade hasn’t filled yet. This trade filled at $3.15 later in the day on 12/16/2024.
Today’s Speculative Crypto-Related Trade
The stock is MicroStrategy (MSTR 0.00%↑), and our trade is a vertical spread expiring on January 17th, buying the $530 strike calls and selling the $540 calls for $1.70. The max gain on 2 contracts is $1,660, the max loss is $340, and the break even is with MSTR at $531.70. This trade filled at $1.70.
Today’s AI-Related Post-Earnings Trade
The stock is Asana (ASAN 0.00%↑), and our trade is buying the $30 strike calls expiring on January 17th, for $0.30. The max gain on 4 contracts is uncapped, the max loss is $150, and the break even is with ASAN at $30.30. This trade filled at $0.25.
Today’s AI-Related Earnings Trade
The stock is Micron Technology (MU 0.00%↑), and our trade is a vertical spread expiring on December 20th, buying the $117 strike calls and selling the $118 strike calls for $0.30. The max gain on 10 contracts is $700, the max loss is $300, and the break even is with MU at $117.30. This trade filled at $0.30. Note: this stock reports earnings on Wednesday, so if you don’t get a fill on your trade by Tuesday’s close, be sure to cancel it.
Exiting These Trades
For the APP trade, I’m going to set a GTC order to exit at $9.50 or $9.75, and lower that price if necessary, as we approach expiration. For the MSTR trade, I’ll do the same. For the ASAN trade, I’m going to set a GTC order to exit half of the contracts at $0.75, and I’ll try to exit any contracts I still have as we approach expiration, for the best price I can get for them. For the MU trade, I will set a GTC order to exit at about $0.95, and lower that price, if necessary, as we approach expiration. I’ll note in the comments of this post when I exit each trade.
Out of the $APP trade today at $9.74, for a gain of 209%.
Micron beat on top and bottom lines, but its forward guidance was lower than expected, and the stock is getting crushed after hours. This trade is going to be an L, but we'll consider the stock for a post-earnings trade after the share price stabilizes.