Markets closed higher for the third session in a row, with the S&P adding .31% in a choppy session. Asia markets closed mostly in the green overnight while Europe indexes are in the red this morning. U.S. futures are pointing to a lower open, the Dollar is higher while Yields, Oil, and Gold are also in the red.
And this is what UPB is reading this morning: Thursday Morning Reads
Last week it was DOCU, this week it is ROKU - names that I had eyes on for some positions and passed only to see the puts/calls go berserk.
ROKU and GOOGL announced yesterday they are extending their Youtube deal. A positive catalyst for a stock that has been decimated. I was looking for calls on Monday and Tuesday ( and last week)but the premiums were elevated. Even on Tuesday when it gapped out of the open and ran to $220 the $230 calls were 1.40 or so ands tough to rationalize adding calls on a name already 10% off the lows... not to mention ROKU fell from the highs to close at $213. If I had entered any calls I would have likely closed the position regardless so helps rationalize the miss with those $230 calls being $30+ at times yesterday. Sure there will be others so will shake it off and move on.
DKNG also rallied yesterday, closing up nearly 7%.. Despite the huge move the calls I flipped flat on Tuesday are still in the red and shows how hard option trading can be. DKNG could be next for an outsized move so certainly will continue to watch and possibly add some calls into next week for a move over $35 and a possible $40+ test:
And my last example on how hard option trading can be is LOVE. They reported a great quarter, stock rallied double digits, and calls are red:
$LOVE is a great example on how hard option trading can be. Pick right direction into earnings, company posts huge #, stock rallies over 13%, yet your OTM calls are down 40% (Maybe not for long though) pic.twitter.com/o2DpRcRpiW
— Option Millionaires (@OMillionaires) December 8, 2021
I mentioned LOVE on the watch list this week. A good thing I did not add calls prior to earnings, but a miss not to add some after the open as the stock faded, then ran all day to nearly test $80. It is a great story and I may look at some $85 strikes if there is any consolidation today under $75:
RNG announced their President and COO was leaving yesterday after the close, and also appointed an interm CFO. The type of news that could pressure the stock today. The stock is already well off its all-time highs but think a move into the $190s and possibly below is in the cards. May look at some speculative puts today:
Chart:
FUBO received a JPM upgrade this morning, also back now watch for some potential calls for a move over $23:
Still eyeing TWLO, SPOT, SAM , IQV for calls. If markets fail to find support today I may look to dabble some lotto puts into tomorrow's CPI number. Names like TEAM, ZS, V, MA, OKTA, and even MDB.
Here are the analyst changes of note for today:
| Torrid price target lowered to $20 from $30 at Cowen | |
| Cowen analyst Oliver Chen lowered the firm's price target on Torrid to $20 from $30 and keeps an Outperform rating on the shares. The analyst said its 3Q experienced sales pressure on supply-chain related inventory delays and believes its multiple is likely to contract in near-term. He noted they narrowed FY2021 outlook and its 4Q guidance is lower versus the Street on inflationary headwinds including air freight and potential inventory delays | |
| Avantor price target raised to $50 from $48 at Cowen | |
| Cowen analyst Dan Brennan raised the firm's price target on Avantor to $50 from $48 and keeps an Outperform rating on the shares. The analyst said while the stock has performed well he sees substantially more upside as the company executes on its strategy to invest in its proprietary products enabling better growth and margins. He sees revenues growing at the high-end of management's guidance through 2025 with the bias even higher | |
| North American Construction upgraded to Buy from Hold at TD Securities | |
| TD Securities analyst Aaron MacNeil upgraded North American Construction to Buy from Hold with a price target of C$25, up from C$23. He views the recent pullback in the share price and underperformance relative to the peer group as a buying opportunity given that his confidence in the management team's ability to execute on both its core oil sands operations and diversification strategy "remains strong," MacNeil tells investors | |
| Rent The Runway path to profitability still underestimated, says Morgan Stanley | |
| Morgan Stanley analyst Lauren Schenk said Rent The Runway delivered a "strong" Q3 beat with accelerating revenue growth and improving profitability in its first quarter following its IPO, noting that its 66% year-over-year revenue growth was "well above" her 51% forecast. While Q4 subscriber guidance "only came in slightly above" her forecast, she sees guidance as potentially conservative, Schenk tells investors. The analyst, who raised her revenue growth forecasts for FY21 and FY22 by 3% and 2%, respectively, believes the market continues to underestimate Rent's product-market fit and path to profitability, she added. Schenk maintains an Overweight rating and $28 price target on the shares, which are down $1.34, or 12%, to $10.16 in pre-market trading | |
| Udemy price target lowered to $40 from $45 at Citi | |
| Citi analyst Nithin Pejaver lowered the firm's price target on Udemy to $40 from $45 and keeps a Buy rating on the shares. The company reported a "solid" Q3 with revenue and profitability in line with expectations, Pejaver tells investors in a research note | |
| Thor Industries price target lowered to $125 from $142 at Truist | |
| Truist analyst Michael Swartz lowered the firm's price target on Thor Industries to $125 from $142 but keeps a Buy rating on the shares. The analyst attributes his reduced price target to expectations of difficult retail comparisons, faster-than-anticipated inventory replenishment, and the likelihood of easing margins over coming quarters. Longer term however, Thor should continue to benefit from a multi-quarter restocking dynamic and historically-elevated margins, Swartz tells investors in a research note, adding that at below 5-times expected FY22 EBITDA, the risk-reward on the stock "remains attractive | |
| Apple stay on App Store injunction an 'upside surprise,' says Morgan Stanley | |
| After the ninth Circuit Court of Appeals granted Apple a stay less than 24 hours before a court ordered injunction was set to force the company to open its App Store up to alternative payment platforms via in-app links, Morgan Stanley analyst Katy Huberty called the news "an upside surprise" that effectively allows Apple to maintain the status quo and reduces the impact of broader changes to App Store payment mechanisms until the Epic case appeal is resolved. Huberty, who thinks resolution of the Epic case appeal is "likely months to years away," keeps an Overweight rating and $200 price target on Apple shares, while pointing out that she has already included a $1.5B headwind to App Store revenue in her Services forecast | |
And here is what I am watching today: RNG, WLO, SPOT, SAM , IQV, LOVE, FUBO, TEAM, ZS, V, MA, OKTA, and MDB.
Let's have a great day!
-JB