Weekend Trader Alert

Weekend Trader Alert

September 25, 2022

Open Positions Update

  • The Oracle (ORCL) November 18, 2022, 80-strike put was closed after hitting its target profit of +100%. If you have not already done so, please close out of your ORCL position at the earliest opportunity.
  • Close the Chevron (CVX) November 18, 2022, 150-strike call on Monday, September 26. Close the position at a limit price within the range of the current market price when you place the order.
  • Close the Caesar’s (CZR) December 16, 2022, 45-strike call on Monday, September 26. 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:

Workday (WDAY)

Place a limit order to buy the Workday (WDAY) December 16, 2022 160-strike put at a limit price within range of the current market asked price when you place your order. At the close on Friday, September 23, this option was offered at $17.90. WDAY closed at $151.24 on Friday, September 23.

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, October 24, close the position.
  • If there is a change to the above closeout parameters, we will notify you in your regular Sunday evening communication.
Cloud concern Workday (WDAY) just pulled back below a pivot zone between the $152 and $154 levels. In addition, the shares experienced rejection last week near the 100-day moving average, and fell below the 80-day trendline -- both of which have been significant moving averages for the equity in the past. The security also just breeched a short-term uptrend and failed in its attempt to retest. What's more, The stock is now sitting below the 150-strike put level and a significant move lower could set up a delta hedge, while peak call resides at the 155-strike and could act as resistance through October's OPEX.
Options traders are exceptionally call-biased, but the optimism is moving into a range where downside is typical and WDAY's price stalls out. This is per the stock's 10-day call/put volume ratio of 2.25 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). There's also room for downgrades amongst the brokerage bunch, as 30 of the 37 in coverage still recommend a "buy" or better.

Options look like a good route to go, as WDAY has frequently exceeded option traders' volatility expectations over the past year, according to the equity’s Schaeffer's Volatility Scorecard (SVS) of 71 out of 100. Our recommended December 160 put has a leverage ratio of -4.65, and will double in value on a 17.88% drop in the underlying shares.

Most Recent Recommendations

The information contained herein is intended solely for the individual subscribers, is not intended for institutional investment organizations, and is not legal to be rebroadcast. Please click here for full disclaimer details.

 Limitation on Schaeffer's Investment Research (SIR) liability: SIR liability, whether in contract, tort, negligence, or otherwise, shall be limited in the aggregate to direct and actual damages not to exceed the fees received by SIR from Subscriber. SIR will not be liable for consequential, incidental, punitive, special, exemplary or indirect damages resulting directly or indirectly from the use of or reliance upon any material provided by SIR. Without limitation, SIR shall not be responsible or liable for any loss or damages related to, either directly or indirectly, (1) any decline in market value or loss of any investment; (2) a subscriber's inability to use or any delay in accessing SIR website or any other source of material provided by SIR; (3) any absence of material on SIR website; (4) SIR failure to deliver or delay in delivering any material or (5) any kind of error in transmission of material. SIR and Subscriber acknowledge that, without limitation, the above-enumerated conditions cannot be the probable result of any breach of any agreement between SIR and Subscriber.