Weekend Trader Series
September 29, 2024
Open Positions Update
- Please extend the scheduled time-stop date on the Merck (MRK) November 15, 2024, 125-strike put to Monday, October 14.
The following is this week's recommendation:
Nasdaq (NDAQ)Place a limit order to buy the Nasdaq (NDAQ) December 20, 2024 70-strike call at a limit price within range of the current market asked price when you place your order. At the close on Friday, September 27, this option was offered at $7.20. NDAQ closed at $72.60 on Friday, September 27.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 21, close the position.
- If there is a change to the above closeout parameters, we will notify you in your regular Sunday evening communication.
Exchange operator stock Nasdaq (NDAQ) hit a record high of $74.87 last week, surpassing its previous 2021 peak above $70. Though the shares have pulled back slightly since then, support at their ascending 30-day moving average lingers below and coincides with prior highs nabbed earlier in the month.
Despite this outperformance, shorts have been building their positions, with short interest up 50% since mid-April and recently hitting an 18-month high. An exodus of these bearish bets could keep the wind at the stock’s back. Analyst upgrades could provide further tailwinds, considering almost half of the 20 analysts in coverage carry a “neutral” rating.
There is pessimism to be unwound in the options pits, too. The stock’s Schaeffer’s open interest ratio (SOIR) and 10-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sit above 1.00, indicating a heavy put skew among short-term options traders that also happens to sit in the upper percentile of its annual range.
Our recommended December 70 call has a leverage ratio of 9.7, and will double on a 10.6% rise in the underlying shares.
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