HD trade ideas
Home Depot (HD) BullishPurchased Calls in Home Depot (HD)
I am not licensed or certified by any individual or institution to give financial advice.
BTO 4 Calls of Home Depot on May 01, 2020.
Stock Price--$218.18
Expiration: May 15, 2020 (May standard)
Strike: $220.00
Cost of Trade/Ask Price: $5.45
This one is going to be a quick turn around due to short term Expiration. I think HD is good for the long term, but I chose this short term position for three reasons:
(1) Affordability--Go too deep In The Money and it gets expensive really fast
(2) Price of Stock proximity to Strike at time of position entry--Just a touch over two dollars puts me In The Money meaning a higher ROI in a
shorter amount of time
(3) Bid-Ask Spread price--I looked at the Spreads of other Expirations and other Strikes and didn't like them. This Spread at time of position
entry was thirty cents ($0.30 or a $5.15 x $5.45 Spread). Most other Spreads on other Strikes were a couple dollars apart.
$225 Short Target for Home DepotFirst off, please don't take anything I say seriously or as financial advice. As always, this is on opinion basis. That being said, let me get into a few of my insights. Home Depot has been recently bullish in terms of analyst calls, and obviously as a short pattern the next target for a quick turn over should be around the $225 mark. Yes, this may have long potential but there are much higher growth stocks and I am simply looking at this from a day trading perspective.
HD - swing puts - watch price and RSI on dailyThe 20 SMA shows a downtrend on the weekly and 30min chart. Price has come up to 10 SMA on the weekly, and in a strong trend the price may not rally back up to the 20 SMA. I am looking for price to head lower, back to yellow support line, maybe lower.
Right now I am only taking a small position because on daily chart the 20 SMA is still upward, so I am watching for this to turn down and RSI will also head back below 50. Then I might add more puts. Otherwise price could head a higher (towards weekly 20 sma).
I bought 5/15 expiry 180 strike. Support (yellow line) is around 186. Remember that time matters. If stock takes too long to move lower, you can exit position and reenter later. Another strategy is to take profits if stock moves towards support, and then open a later expiry if it breaks lower.
HD puts, unless stock goes over 192.80On the weekly chart, you see a bullish engulfing candle, technically that signal triggers when the high is broken. This week the high is 192.80, same as last week. Stock has to trade at 192.81 or higher for candle pattern to trigger calls.
Based on daily chart, I am looking for stock to move lower since it has risen up to touch 20 SMA. You will see RSI go below 50 today or tomorrow on daily, and you can also look for signs on 30min chart.
