Looks like TNDM was a deal. That support held strong and it rebounded nicely today. But what do we do with that? There are a couple factors that dictate the best play.
Typically this would be a great candidate for a call trade as that rebound momentum would offer great leverage. But when you look beneath the surface, the liquidity is spotty. The open interest on most calls going out 2-4 weeks is small. That means if we pick up that call option contract, we could have a hard time selling it, even if it is profitable.
There is one exception though. The Nov 20 19 calls have about 3x the open interest of almost all other contracts. That is a bit of a red flag in that very soon there are going to be a lot of contacts for sale, driving that price down on a ticker that has thin liquidity in general.
The play here is probably better to buy the underlying and look for a 20% grab in the next month or so.
In other good news, the LUV calls did great yesterday, going up about 50% in the day. That is a win to take.
Keep learning and trade wisely,
John Boyer
Editor
Market Wealth Daily
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