Two Possible Afternoon Plays

 | Aug 21, 2014 | 12:15 PM EDT  | Comments
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Stock quotes in this article:

spy

,

aapl

,

orcl

,

expe

,

pcln

It's time to round up the party and break out the SPDR S&P 500 (SPY) $200 hats! Of course, a few folks are still doing the walk of shame in their Apple (AAPL) $100 shirts.

Unfortunately, I will be partying with one less furry friend as I had to say a very sad goodbye to my trading co-pilot of the last three years yesterday. It makes sitting at the desk just a bit harder today.

The individual names seem a bit more scattered than what the overall market index action might lead one to think, so it is certainly tough to get aggressive on the long side right now. I would imagine $200 on the SPY will act as a very nice selling point and "justification" for some to take profits.

Oracle (ORCL) looks intriguing right now and I think it may hold up, even if the market pulls back or pauses. The stock was beaten up in June and it is now looking to recover. The price is into the gap here left from June, but I think we need to see a few days consolidation before the gap can be filled.

Oracle (ORCL) -- Daily
Source: StockCharts.com

 

This sets up an ideal situation for a diagonal or calendar spread. I really like the idea of going long the September 5 $41.50 call and short the August 29 $42 call for $0.37 or less. I think there is a chance the stock will stay in the $41.25 to $42 range through next week.

Another approach would be to use the same expirations but go with a calendar spread for $0.12. I'm more a fan of using both. Rather than making a commitment to one or the other, just use half a size for each play. If the stock closes below $40.75, then there is a good chance this trade will be dead in the water. I would only risk what I am willing to completely willing to lose.

Expedia (EXPE) seems to be headed in the opposite direction as Priceline (PCLN) right now. We are seeing a breakout attempt on a cup-and-handle pattern, which would target $90-$91. The momentum is very strong along with the price, which is running in a bullish channel in addition to the cup-and-handle pattern. I would look toward September call spreads to cut costs a bit and give the trade time. Something like an $85-$91 call spread around $2.50 or an $86-$90 call spread around $1.70 would make for an attractive risk-reward set up. A close below $85 would put up a big yellow flag while below $84 will send me to the shower with losses.

Expedia (EXPE) -- Daily
Source: StockCharts.com

 

I am just getting back in the saddle today, so I'm looking at these for possible afternoon positions. I still need to get my legs under me this morning before I take any action.

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