Weekend Trader Alert

Weekend Trader Alert

April 16, 2023

Open Positions Update

  • The Baidu (BIDU) May 19, 2023, 140-strike call reaches its time-stop this Monday, April 17. Close the position at a limit price within range of the current market price when you place the order.
  • Close the Taiwan Semiconductor (TSM) June 16, 2023, 90-strike call on Monday, April 17. 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:

Crocs (CROX)

Place a limit order to buy the Crocs (CROX) June 16, 2023 125-strike call at a limit price within range of the current market asked price when you place your order. At the close on Friday, April 14, this option was offered at $17.60. CROX closed at $134.30 on Friday, April 14.

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, May 15, close the position.
  • If there is a change to the above closeout parameters, we will notify you in your regular Sunday evening communication.
Footwear stock Crocs (CROX) recently broke out of a tringle pattern on the charts and pushed above the $129-$130 range resistance zone. The equity also found support at its year-to-date anchored volume weighted average price (AVWAP) level. Adding to this bullish technical setup, CROX is trading above its +20% year-to-date breakeven level, and recently neared two historically bullish trendlines -- the 20- and 50-day moving averages.
Going forward, the 125- and 128-strike put build could be supportive. The equity recently traded through the 130-strike call level that capped price action, with potential for price to target large overhead call strike levels at 150 or even 190.

An unwinding of pessimism in the options pits could create even more tailwinds. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Crocs stock sports a 50-day put/call volume ratio that ranks higher than 94% of annual readings.

Those looking to speculate with options can do so for a bargain right now. CROX's Schaeffer's Volatility Index (SVI) of 42% stands at the bottom of readings from the past 12 months, meaning options traders are pricing in extremely low volatility expectations at the moment. Our recommended June 125-strike call has a leverage ratio of 5.2, and will double on a 19.3% pop in the underlying shares.

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