Weekend Trader Series
November 24, 2024
Open Positions Update
- The Nike (NKE) January 17, 2025, 82.50-strike put reaches its time-stop this Monday, November 25. Close the position at a limit price within range of the current market price when you place the order.
The following is this week's recommendation:
Toast (TOST)Place a limit order to buy the Toast (TOST) January 17, 2025 40-strike call at a limit price within range of the current market asked price when you place your order. At the close on Friday, November 22, this option was offered at $4.65. TOST closed at $42.74 on Friday, November 22.Do not attempt to enter this position after Monday's close.Please use the following guidelines to manage the position:- Exit the position if the option is at a 100% gain from your entry price.
- If the option has not reached its target profit by 3:00 p.m. Eastern time on Monday, December 23, close the position.
- If there is a change to the above closeout parameters, we will notify you in your regular Sunday evening communication.
Toast (TOST) stock gapped higher on Nov. 8 after the fintech company’s earnings beat, taking out half its all-time high at $35. The shares have since continued higher, moving above analysts’ 12-month consensus price target of $38.33, the $40 level, which is home to its 2021 initial public offering (IPO) price, and $41 – a 50% retracement of its all-time high and 2022 low.
TOST also took out the $42 level last week, home to peak call open interest (OI) at the December series, and moved on to 52-week highs despite a Nov. 20 downgrade. The stock is still trading above the Nov. 19 close despite the bear note, showing underlying technical strength.
Despite Toast stock more than doubling in value year to date, only half of the 26 analysts in coverage maintain a “buy” or better rating, and any upgrades could help extend the stock’s recent momentum. Plus, though shorts have been in covering mode since short interest hit all-time highs, it would still take shorts more than six days to cover, at TOST’s average pace of trading.
The equity’s implied volatility (IV) sits lower than 97% of readings from the past year, and below its 60-day historical volatility (HV). Our recommended January 17, 2025 40-strike call has a leverage ratio of 6.7, and will double on a 14.5% rise in the underlying security.
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