Option Traders Think This Stock Has Gas in the Tank

Good morning, Power Profit Traders!

As a reminder, I will be LIVE at 9:30 a.m. ET every morning RIGHT HERE, talking about current market events, stocks, bonds, trade opportunities, seasonality, cryptocurrencies, and a whole lot more, so make sure you’re there with a pen and paper!

That said… Did earnings season get off to a great start last week or what?!

The Dow locked in its best week since June, the S&P 500 enjoyed its best week since July, and the Nasdaq Composite wrapped its best week since August.

Are we seeing that positive October seasonality I discussed here last month…?

It sure looks that way, but there are a lot more earnings to go — even more reason it’s important for you to be in the room when I’m LIVE at the open each day.

After all, one week does not make a trend — just like one company reporting stronger-than-expected earnings doesn’t make everything sunshine and rainbows again.

While last week was all about bank earnings, today I want to see which stocks are attracting attention ahead of THIS week’s earnings docket…

By looking at a couple of tools from my TG Suite app’s Morning Report, I can get a sense for where the action is to start the week — and it looks like traders have high hopes for one automaker, in particular, ahead of earnings Wednesday.

TSLA Calls Attract Attention Ahead of Earnings

Tesla (TSLA) appeared near the top of Friday’s High Option Volume list.

The shares last week jumped to their highest point since the first quarter, finishing Friday at $843.03 to wrap a five-day winning streak.

It looks like option traders are expecting that upward momentum to continue into Wednesday night’s earnings release, with the electric vehicle maker — which is moving its headquarters to Austin, Texas — expected to unveil its quarterly figures after the close.

On Friday, TSLA’s $860-strike call expiring Nov. 19 saw nearly 36,600 contracts change hands, placing it in the No. 2 slot on our Power Profit Trades Watchlist.

These calls won’t move into the money (ITM) unless TSLA shares topple that $860 level before the options expire.

What’s more, because the calls went for about $28 on Friday, due to elevated IV ahead of earnings, buyers would need TSLA to get closer to $900 in order to break even.

Elsewhere, AT&T (T) earnings could be interesting Thursday morning.

The telecom titan’s $30-strike call expiring Jan. 21 has been near the top of our High Open Interest list, with nearly 146,000 contracts in residence — second to only Ford Motor’s (F) Jan. 21 $20-strike call.

However, AT&T stock hasn’t been north of $30 since May, closing Friday at $25.70.

Buyers of these calls are likely hoping Ma Bell reports stronger-than-expected earnings later this week, sending T shares back above the round-number $30 level.

Outside of those stocks, keep an eye on fellow blue chips Procter & Gamble (PG), Johnson & Johnson (JNJ), and Intel (INTC), which are just some of the Dow components expected to report this week.

In addition, Netflix (NFLX) earnings will surely make some noise, and I’ll be keeping an eye on our Morning Report tool to see if any travel names pop up on our pre-earnings radar, with Southwest Airlines (LUV), Alaska Air Group (ALK), and American Airlines (AAL) among the companies set to report.

Now, get in the room and watch me LIVE from 9:30 to 10:30 a.m., because trust me — you don’t want to be behind the curve THIS week, Power Profit Traders.

Talk to you soon!

Tom Gentile
America’s #1 Pattern Trader

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