SQ and PLTR are both coming off lackluster post-earnings reactions
On Tuesday, November 9, Schaeffer's Investment Research's Senior Market Strategist Matthew Timpane, CMT, was a featured presenter at the Benzinga Global Fintech Awards conference. Below is an excerpt from his presentation, on two popular tech disruptors.
So on to the trade ideas. We have two of them here for you today. Square Inc (NASDAQ:SQ) recently had not the greatest earnings reaction; it's trading lower in tandem with PayPal (PYPL). But there is a chance that we could be approaching an area where SQ is tradable. We're approaching this lower trendline in a symmetrical triangle, it's kind of almost even flag-ish. If you look at it from this lower point down here; the year-to-date breakeven is around $221, so this area could easily hold. What we could see as possibly maybe a break down and then a quick snap back. Or we could just maybe hold this area. So there's something to watch.
The Schaeffer's Volatility Scorecard ranking on Square stock is 71. SQ options are priced in the 21st percentile. And the buy-to-open 50-day put/call volume ratio is in the 84th percentile, with short interest percentage of float at 8.41% and rolling over from year-to-date highs. So there is some negative sentiment building up on Square. And that usually is what we're looking for, to produce the most bang for our buck on call options. Also, the second largest put open interest is at this 220-strike level. So peak call and peak put are alternatively right now at 250-strike. That means you might have some upside gains capped. But if you did get this pushed on that 220-level, it's probably worth the gamble to take a shot on this on the long side.
Palantir Technologies Inc (NYSE:PLTR) stock just reported earnings and is not trading very well. But you know, it could be a short term put strategy here down to some of these levels. You could have the year-to-date breakeven level you could target on a short term basis, or even coming down here to this $21 level, which is -10%. But in the longer term, I'm definitely more bullish on this. Watch out for the fakeout. Currently it's oversaturated in calls, which is the reason why we're probably getting a really adverse reaction here as well. But, you know, oddly enough, where did it stop at? It's IPO-anchored VWAP position.
In case you missed the live presentation and want to catch up on Timpane's deep-dive into the fintech sector, check out the presentation here: