Weekend Trader Series
May 12, 2024
Open Positions Update
- Please extend the scheduled time-stop date on the International Brokers (IBKR) June 21, 2024, 105-strike call to Tuesday, May 28, 2024.
- Close the Dick's Sporting Goods (DKS) July 19, 2024, 200-strike call on Monday, May 13, 2024. Close the position at a limit price within the range of the current market price when you place the order.
The following is this week's recommendation:
Maplebear (CART)Place a limit order to buy the Maplebear (CART) July 19, 2024 38-strike put at a limit price within range of the current market asked price when you place your order. At the close on Friday, May 10, this option was offered at $4.30. CART closed at $34.94 on Friday, May 10.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, June 3, close the position.
- If there is a change to the above closeout parameters, we will notify you in your regular Sunday evening communication.
Instacart parent Maplebear (CART) saw a bearish outside day earnings reaction, which can be attributed to one-time factors from the first quarter that are unlikely to repeat. Gross transaction value outlook for the second quarter was below expectations, and the equity has crossed below both the 20- and 50-day moving averages, after its earnings reaction peak failed near last month’s highs.
Both pre- and post-earnings the shares were trading near $37.60, which is equal to the $10 billion market cap level, a former site of resistance. A trendline connecting higher lows since late April broke to the downside on Friday and call buying is looking prevalent.
At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security’s 10-day call/put volume ratio reads 2.23, and an unwinding in this bullishness could send CART shares lower. Call open interest is overhead, too. Our recommended July 38 put has a leverage ratio of negative 5.56, and will double on a 14.97% drop in the underlying security.
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