Target (TGT) reported earnings before the bell on Wednesday that beat estimates on both revenue and profits. The company also expects its fiscal Q4 comparable sales growth to be higher than previous forecasts. Moreover, TGT claimed the supply chain mess has not been an issue – store shelves are full and ready for the holiday buying onslaught.

Analysts were mostly bullish on the report, giving TGT several target price increases (there was one lower price). One went as high as $350, a 38% premium to Friday’s closing price. The stock price was not rewarded, however. The shares dropped 4.7% on Wednesday and slid further the rest of the week. However, this was a common theme among several retailers, including Walmart (WMT). In fact, the overall retail sector was lower for the week.

The pullback dropped the shares to just above their 50-day moving average (blue line in chart). This trade is thus a bet that TGT will regain its footing and stay above the 50-day as holiday sales numbers – that are predicted to be robust – start rolling in. The short 245 strike (red line) of our put credit spread is below the 50-day, relying on trendline support to hold through expiration.

If you agree that TGT will stay atop its 50-day moving average line in chart), consider the following trade that relies on the stock remaining above 245  (through expiration in six weeks.

Buy to Open TGT 31Dec 240 put (TGT211231P240)
Sell to Open TGT 31Dec 245 put (TGT211231P245) for a credit of $1.60 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when TGT was trading around $251. Unless the stock rises quickly from here, you should be able to get close to this amount.

Your commission on this trade will be only $1.30 per spread.  Each spread would then yield $158.70. This trade reduces your buying power by $500 and makes your net investment $341.30 ($500 – $158.70) for one spread.  If TGT closes above $245 on December 31, both options will expire worthless and your return on the spread would be 46% ($158.70/$341.30).

Affirm Holdings (AFRM) provides a platform for point-of-sale payments for consumers and merchants. In August, AFRM announced a partnership with Amazon.com (AMZN) to offer flexible payment solutions to customers with AMZN purchases above $50. AFRM reported earnings on Wednesday after the bell that missed on profits but beat on revenue. The company also raised sales guidance.

Wall Street apparently forgave the earnings miss, largely because it was not clear if the discrepancy used comparable numbers. Moreover, AFRM said its AMZN relationship as a buy-now-pay-later service was exclusive. Clearly, analysts were looking at AFRM’s growth prospects, as the company was greeted with several target price upgrades that reached as high as $185 (the stock closed at $149 on Friday).

After a nasty, four-day 21% plunge heading into earnings that pulled the stock to its 50-day moving average, the stock rebounded 13.7% the day after the earnings news. Given the earnings rebound, analyst target upgrades and deal with AMZN, we are going with a bullish trade on AFRM that keys on the stock maintaining its three-month rally and staying atop its 50-day moving average (blue line in chart). The short put strike of our credit spread sits at $133 (red line in chart), just below the 50-day.

If you agree that AFRM will continue its uptrend and stay atop its 50-day moving average line in chart), consider the following trade that relies on the stock remaining above $133  (through expiration in seven weeks.

Buy to Open AFRM 31Dec 128 put (AFRM211231P128)
Sell to Open AFRM 31Dec 133 put (AFRM211231P133) for a credit of $1.85 (selling a vertical)

This credit is $0.05 less than the mid-point of the option spread when AFRM was trading at $149. Unless the stock rises quickly from here, you should be able to get close to this amount.

Your commission on this trade will be only $1.30 per spread.  Each spread would then yield $183.70. This trade reduces your buying power by $500 and makes your net investment $316.30 ($500 – $183.70) for one spread.  If AFRM closes above $133 on December 31, both options will expire worthless and your return on the spread would be 58% ($183.70/$316.30).

MetLife (MET) won’t get anyone’s juices flowing. It’s frankly a rather boring insurance and financial services company that’s been around for 158 years. But who cares … if we can make money on a trade, right?

MET reported earnings last week that beat estimates on the top and bottom lines. Hardly anyone noticed. Analysts were silent. There were no stories other than a dry listing of its key performance numbers. And the stock fell 2% the next day. Ho hum.

But MET is up 36% for the year, which is well ahead of the S&P 500’s 25%. After a swoon in June and July, the stock has been grinding steadily higher along the dual support of its 50-day and 200-day moving averages. The key is the 50-day (blue line in chart), which has allowed just three daily closes below it during the past three months. This trendline, which is rising slightly, sits at $61.10, which is above the short strike of our put spread trade. Thus, MET would have to pierce this support to hurt this trade. And the 200-day (red line in chart) sits at $61 to provide another layer of support. The last time MET closed below the 200-day was more than a year ago.

If you agree that MET will continue its slow ascent and stay atop its 50-day moving average line in chart), consider the following trade that relies on the stock remaining above $62.50  (through expiration in six weeks.

Buy to Open MET 17Dec 60 put (MET211217P60)
Sell to Open MET 17Dec 62.5 put (MET211217P62.5) for a credit of $0.75 (selling a vertical)

This credit is $0.04 less than the mid-point of the option spread when MET was trading at $64. Unless the stock rises quickly from here, you should be able to get close to this amount.

Your commission on this trade will be only $1.30 per spread.  Each spread would then yield $73.70. This trade reduces your buying power by $250 and makes your net investment $176.30 ($250 – $73.70) for one spread.  If MET closes above $62.50 on December 17, both options will expire worthless and your return on the spread would be 42% ($73.70/$176.30).

Intuitive Surgical (ISRG) – the maker of the da Vinci robotic surgical system – reported earnings on Tuesday that showed a solid increase from a year earlier and beat estimates, though not by much. The company shipped 72% more da Vinci units compared to a year earlier. Also, the company tightened – but did not increase – its 2021 guidance. The report was accompanied by Johnson & Johnson (JNJ) announcing a two-year delay in developing a rival soft-tissue surgical robot.

Though there were no upgrades, analysts apparently approved of the numbers through price target increases. One went as high as $381 (ISRG closed at $341.52 on Friday). The stock reacted well to the report, gaining 2.8% through the end of the week. In the process, the shares moved above the 20-day moving average for the first time in six weeks. The stock has tended to respect the 20-day, using it as support during a three-month, 34% rally and as resistance during the recent three-week decline. Note that the short put of our credit spread is below this trendline.

If you agree that ISRG will stay atop its 20-day moving average (blue line in chart) line in chart), consider the following trade that relies on the stock remaining above $330 (red line in chart)  (through expiration in four weeks.

Buy to Open ISRG 19Nov 325 call (ISRG211119C325)
Sell to Open ISRG 19Nov 330 call (ISRG211119C330) for a credit of $1.55 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when ISRG was trading at $341.52. Unless the stock falls quickly from here, you should be able to get close to this amount.

Your commission on this trade will be only $1.30 per spread.  Each spread would then yield $153.70. This trade reduces your buying power by $500 and makes your net investment $346.30 ($500 – $153.70) for one spread.  If ISRG closes above $330 on November 19, both options will expire worthless and your return on the spread would be 44% ($153.70/$346.30).

Amid the giddiness over solid earnings from the big banks, you may have missed the lousy earnings report from insurance giant Progressive (PGR) on Thursday morning. Earnings plunged 90% from a year ago and fell 10% shy of estimates. Revenue came up a billion dollars short of expectations. The company also swung to a loss in September due to payouts for Hurricane Ida. Analysts apparently weren’t paying attention, as there were no upgrades, downgrades or target price changes issued after the news.

The stock didn’t do much after the report, falling less than a percent on Thursday. On Friday, the shares gained that all back – and more – and closed right on their declining 20-day moving average. Despite the rebound, PGR has been trading sideways for three weeks after suffering a 6.2% drop in September that was guided by the 20-day. All relevant moving averages sit at or above the stock price, ready to lend resistance. We are therefore playing a bearish call credit spread with the short call sitting above PGR’s 20-day moving average.

If you agree that PGR will struggle with its 20-day moving average (blue line in chart) line in chart), consider the following trade that relies on the stock remaining below 92.5 (red line in chart)  (through expiration in five weeks.

Buy to Open PGR 19Nov 95 call (PGR211119C95)
Sell to Open PGR 19Nov 92.5 call (PGR211119C92.5) for a credit of $0.80 (selling a vertical)

This credit is $0.05 less than the mid-point of the option spread when PGR was trading at $91.25. Unless the stock falls quickly from here, you should be able to get close to this amount.

Your commission on this trade will be only $1.30 per spread.  Each spread would then yield $78.70. This trade reduces your buying power by $250 and makes your net investment $171.30 ($250 – $78.70).  If PGR closes below $92.50 on November 19, both options will expire worthless and your return on the spread would be 46% ($78.70/$171.30).

Cloud infrastructure and software provider Oracle (ORCL) has been weathering the market’s recent storm better than most. While the broader market has struggled since the start of September – the S&P 500 is down 3% – ORCL has thrived, gaining 6%. In fact, the stock closed at a record high on Friday. That move pushed the shares above the top of a trading range between 85 and 92 that has been in place since early July.

ORCL’s recent earnings report on Sept. 13 was in line or beat both analyst estimates and guidance. The stock dropped 3% the day after the report, which is typical of the stock’s post-earnings performance. So is the subsequent strong recovery, as ORCL is up 9% since the initial drop.

Likely helping the cause were a few target price increases. It’s notable that analysts may be jumping on ORCL’s bandwagon. In September, just six of 30 (20%) covering analysts rated ORCL a buy or better. Today, 26 of 36 analysts (72%) are in the bullish camp.

We are playing a bullish put credit spread with the short put sitting just above ORCL’s 50-day moving average. This trendline will likely beak above the short strike at 90 in the next few days based on the stock’s recent strength.

If you agree that ORCL will stay above 50-day moving average ( (blue line in chart) line in chart), consider the following trade that relies on the stock remaining above 90 (red line in chart)  (through expiration in six weeks.

Buy to Open ORCL 19Nov 87.5 put (ORCL211119P87.5)
Sell to Open ORCL 19Nov 90 put (ORCL211119P90) for a credit of $0.45 (selling a vertical)

This credit is $0.03 less than the mid-point of the option spread when ORCL was trading above $94. Unless the stock rises quickly from here, you should be able to get close to this amount.

Your commission on this trade will be only $1.30 per spread.  Each spread would then yield $43.70. This trade reduces your buying power by $250 and makes your net investment $206.30 ($250 – $43.70).  If ORCL closes above $90 on November 19, both options will expire worthless and your return on the spread would be 21% ($43.70/$206.30).

As its ticker symbol implies, Salesforce.com (CRM) provides cloud solutions for customer relationship management needs. CRM reported earnings in late August that blew away expectations on both the top and bottom lines. The report was met by the usual round of target price increases that reached as high as $340 (CRM closed at $260 on Friday).

The stock gapped higher after the report and extended as much as 5.5% higher the next day, eventually closing with a 2.5% gain. But the shares then sagged, joining the rest of the market in the early-September swoon. In fact, CRM fell more than 8% from its post-earnings high.

But the shares appeared to find a bottom last week, thanks to the support of the 50-day moving average. Since turning higher in May, the 50-day has supported pullbacks in July and August. CRM has been stepping higher since a low in early March, putting in a series of higher highs and lows in a rally that has covered nearly 30%. This trade is relying on this trendline support holding for the next six weeks, as the short 250 put of our credit spread is just below the 50-day.

If you agree that CRM will stay above the 50-day moving average (blue line in chart), consider the following trade that relies on the stock remaining above 250 (red line in chart) through expiration in six weeks.

Buy to Open CRM 29Oct 245 put (CRM211029P245)
Sell to Open CRM 29Oct 250 put (CRM211029P250) for a credit of $1.10 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when CRM was trading at $260. Unless the stock rallies quickly from here, you should be able to get close to this amount. Your commission on this trade will be only $1.30 per spread.  Each spread would then yield $108.70. This trade reduces your buying power by $500 and makes your net investment $391.30 ($500 – $108.70).  If CRM closes above $250 on October 29, both options will expire worthless and your return on the spread would be 27% ($108.70 / $391.30).

Going Once, Going Twice … Sold on CPRT

Copart (CPRT) provides online auction and vehicle remarketing services in the U.S. and several other countries. On Wednesday, the company reported Q4 earnings that easily beat on the top and bottom lines. Used car prices are soaring and CPRT is positioned perfectly to leverage the market. Analysts seem to agree, as CPRT received several target price increases that ranged up to $165 (CPRT closed at $143 on Friday). Despite the positive news, the stock fell as much as 5% on Thursday before closing 2% lower. However, CPRT gained more than a percent on Friday amid a down market.

The stock has been in rally mode since late March, gaining more than 30%. The 50-day moving average has been instrumental in guiding the uptrend, containing pullbacks in May, June and August. The trendline appears to be doing its job again, as it supported this week’s post-earnings drop. This trade is relying on this support holding for the next five weeks as the short 140 put of our credit spread is just below the 50-day.

If you agree that CPRT will stay above the 50-day moving average (red line in chart), consider the following trade that relies on the stock remaining above 140 (blue line in chart) through expiration in five weeks.

Buy to Open CPRT 15Oct 135 put (CPRT211015P135)
Sell to Open CPRT 15Oct 140 put (CPRT211015P140) for a credit of $1.20 (selling a vertical)

This credit is $0.05 less than the mid-point of the option spread when CPRT was trading at $143. Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will be only $1.30 per spread.  Each spread would then yield $118.70. This trade reduces your buying power by $500 and makes your net investment $381.30 ($500 – $118.70).  If CPRT closes above $140 on October 15, both options will expire worthless and your return on the spread would be 31% ($118.70 / $381.30).

Software developer (QuickBooks, TurboTax) Intuit (INTU) reported earnings on Aug. 24 that handily beat estimates on all fronts. Earnings came in at $1.97 per share, topping the analyst forecast by 24%, while quarterly revenue of $2.56 billion beat the estimate by 10%. The company also raised its quarterly and annual revenue and earnings guidance above expectations. To top it off, INTU raised its dividend and approved a new $2 billion repurchase authorization.

The Street clearly loved the report, as the stock was hit with several large target price increases (one raised the price 27%). The average new target price after these raises was around the $640 mark, which is 13% above INTU’s closing price on Friday.

The stock price took the news and target increases in stride, though, with no change on Thursday after the report. On Friday, the stock resumed its huge rally with a 2.4% gain. INTU is up nearly 50% in 2021, with most of that gain coming in the past 3-1/2 months. The shares have been riding along their 20-day moving average, a trendline that has not allowed one daily close below it since mid-May. The 20-day is currently at 541 but should cross above the 550 level in less than two weeks at its current pace. This is also the site of the short put strike of our credit spread.

If you agree that INTU will continue its rally along the 20-day moving average, consider the following trade that relies on the stock remaining above 550 through expiration in seven weeks.

Buy to Open INTU 15Oct 540 put (INTU211015P540)
Sell to Open INTU 15Oct 550 put (INTU211015P550) for a credit of $2.80 (selling a vertical)

This credit is $0.05 less than the mid-point of the option spread when INTU was trading at $566. Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will be only $1.30 per spread.  Each spread would then yield $278.70. This trade reduces your buying power by $1,000 and makes your net investment $721.30 ($1000 – $278.70).  If INTU closes above $550 on October 15, both options will expire worthless and your return on the spread would be 39% ($278.70 / $721.30).

Sea Limited (SE) is a digital entertainment company based in Singapore. SE reported earnings on Tuesday that showed a wider loss than expected but exceeded revenue estimates. In addition, the company raised its FY21 sales guidance. Wall Street clearly overlooked the profit miss, as several analysts raised their price targets to the $330-350 range (SE closed just above $309 on Friday).

SE has been on a monster run for 2-1/2 years. The stock is up 55% in 2021 and a whopping 27-fold since the end of 2018. More recently, the stock has been riding along the support of its 50-day moving average, a trendline it last closed below three months ago. Note that the short (sold) put strike of our credit spread (red line in chart) is just below the current location of the 50-day (blue line), which is 8.5% below the current stock price. Thus, this trade is relying on that support holding through the trade’s expiration in six weeks.

If you agree that SE will stay above its 50-day moving average, consider the following trade that relies on the stock remaining above 285 through expiration in six weeks.

Buy to Open SE 1Oct 280 put (SE21101P280)
Sell to Open SE 1Oct 285 put (SE21101P285) for a credit of $1.35 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when SE was trading at $309. Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will be only $1.30 per spread.  Each spread would then yield $133.70. This trade reduces your buying power by $500 and makes your net investment $366.30 ($500 – $133.70).  If SE closes above $285 on October 1, both options will expire worthless and your return on the spread would be 37% ($133.70 / $366.30).