Crocs Stock Seeing Post-Earnings Support

The stock has an interesting technical setup

Nov 8, 2022 at 2:39 PM

CROX

Crocs Inc (NASDAQ:CROX) is enjoying tailwinds after a third-quarter earnings and revenue beat. This summer, the shares pulled back to their 60-month moving average, before crossing above the 12-month trendline earlier this month. This pattern is similar to what we saw in 2020, with the 12-month moving average crossover eventually leading to outsized gains for the security.

crox wt nov8

What’s more, there was follow-through buying after the security’s last positive reaction in late October, and the shares are now above the $77 mark, which was a breakdown level in August from a trendline connecting higher lows. This level is also the site of CROX’s previous post-earnings reaction, and a retake of this region could squeeze out shorts. With the equity now above a potential trendline of resistance connecting prior three-weeks highs, it looks like an ideal time to speculate on CROX’s next moves with calls.

It’s also worth noting short interest has increased 60% since March. Using the 150-day moving average as proxy for average shorted price, shorts are underwater at around $64. This suggests shorts could begin covering into the end of the year. Our recommended call option has a leverage ratio of 3.5 and will double in value on a 27.4% pop in the underlying shares.

Subscribers to Schaeffer's Weekend Trader options recommendation service received this CROX commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

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