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CNBC
2 days ago
- Business
- CNBC
Buying the dip on this footwear stock using options after 'overdone' sell-off
Crocs got hammered — down nearly 30% after the Thursday report — after cautious guidance tied to the macro backdrop overshadowed an earnings beat. Sure, uncertainty is everywhere right now, but such a flush on a name that still topped earnings looks overdone. Analyst views are mixed, yet even the downgrades (Stifel, Barclays, BofA, KeyBanc) carry price targets in the $80–$100 range — still above where CROX is trading. I'm not expecting fireworks here, but the setup I like only needs CROX to trade around $77 —about 50 cents from current levels — to deliver a 100% return on risk. Small move, defined risk, clear payoff. For CNBC readers: I'm opening up my options trade scanner for free —grab a few more trades like this while it's live. I also break down these setups in detail in my book Mean Reversion Trading . To provide confirmation, I am using two technical indicators for this trade setup. MACD (moving average convergence divergence): One reliable way to spot potential reversals is the MACD indicator. The standard settings (12, 26, 9) are widely used but can be a bit laggy, so I often switch to MACD (5, 13, 5) for quicker reads. On CROX, the MACD line (blue) still hasn't crossed above the signal line (yellow). With post-earnings setups — especially after a steep drop — patience pays. Waiting for confirmation (e.g., the bullish crossover or at least a turning histogram) helps avoid getting trapped in the wrong trade if the slide continues. RSI (relative strength index): The RSI is a straightforward momentum gauge and a handy reversal tell. Since it's currently oversold, consider waiting for it to curl higher and reclaim 30 for added confirmation — helps avoid jumping in on a false start. The trade: CROX 76-77 bull call spread To get bullish on CROX, I'm using a bull call spread. With the stock around $76.56, the setup is simple: buy the $76 call (ITM) and sell the $77 call (OTM) as one package — defined risk and defined payoff. If price wiggles, you can scale by layering more spreads. For example, if CROX dips toward $73, add a $73–$74 call spread to take advantage of the pullback while keeping risk tight. Here is my exact trade setup: Buy $76 call, Sept. 12 expiry Sell $77 call, Sept. 12 expiry Cost: $50 Potential Profit: $50 If CROX finishes at or above $77 (the short strike) by expiration, the spread pays its full $1.00 value—turning a roughly $0.50 debit into a 100% return. Running 50 contracts risks $2,500 for a $2,500 max gain. As CROX rebounds, you can ladder in additional spreads to scale exposure methodically and capitalize on these occasional washouts. -Nishant Pant Founder: Author: Mean Reversion Trading Youtube, Twitter: @TheMeanTrader DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
CNBC
22-07-2025
- Business
- CNBC
Using options to trade a potential upside breakout in gold
This week, I'm once again using a debit spread for my trade on GLD — but with a different approach to identifying the setup. At times, stocks enter a prolonged sideways grind — a phase where price action stalls and volatility dries up. These periods of consolidation can drag on for weeks or even months, testing a trader's patience. And sometimes, the best move during these phases is no move at all — sitting in cash and waiting for cleaner setups to emerge. But these quiet stretches don't last forever. What traders call a "squeeze" often develops during low-volatility conditions — where Bollinger Bands, a volatility-based indicator, contract tightly and get caught inside the Keltner Channels, another volatility tool. This compression signals that a breakout may be coming. Once price finally escapes this squeeze zone, it can trigger sharp, explosive moves — and that's where the real opportunity lies. A popular technical indicator available on most platforms makes your life easy by catching these "squeezes" and even the breakouts. This is how it works: When a stock enters a low-volatility or sideways consolidation phase, the TTM Squeeze indicator begins plotting red dots on the chart. These red dots signal that the stock is in a "squeeze" — a period where price is coiling up. During this phase, it's usually best to stay on the sidelines, as clean directional moves are unlikely. A breakout from this squeeze is marked when those red dots turn green. That's your early heads-up that volatility is starting to return. Now, pair that with the momentum histogram: If the bars are blue, it often points to a bullish breakout. If the bars are red, it may suggest a bearish breakdown. In the case of GLD, we're still in that red-dot waiting phase — meaning the squeeze is in play, and we're watching for confirmation. Once green dots begin to show up, it tells us that volatility is expanding again and a directional move could be setting up. One key rule: wait for at least three consecutive momentum bars in the same direction before pulling the trigger. False breakouts are common, and this filter helps increase your odds of catching the real move. The Trade Setup: GLD 315-316 Bull Call Spread Since GLD hasn't broken out of its squeeze just yet, we're in wait-and-watch mode for now. But if it does break out in the next few days and starts trading around $315, I'll be looking to initiate a bull call spread — a simple, defined-risk options setup. Here's the trade I'd consider: Buy $315 call, Aug 15 expiry Sell $316 call, Aug 15 expiry Cost: $50 Potential Profit: $50 If GLD climbs to $316 or higher by expiration, this setup would yield a 100% return on the amount risked. Scaling the trade with 50 contracts, for example, means risking $2,500 for the chance to make $2,500. As GLD continues to trend higher, traders can ladder into additional spreads — gradually building the position and increasing exposure while still keeping risk tightly managed. -Nishant Pant Founder: Author: Mean Reversion Trading Youtube, Twitter: @TheMeanTrader DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
CNBC
15-07-2025
- Business
- CNBC
Trading this software stock after a recent sell-off using options
Sometimes the market just flat-out overreacts — and if you've got the right tools and mindset, those overreactions can turn into serious opportunities. That's where mean reversion comes in. It's all about stepping in after the panic, not during it — betting that things will snap back to equilibrium. Now, pair that with a strategic use of options, and you've got a disciplined way to profit from these snapbacks without taking on wild risk. I lay out the full framework for this style of trading in my book Mean Reversion Trading , and there are tons of live trade examples on my site . One name catching my attention right now is Autodesk (ADSK) . The stock dropped a brutal 12% in just four days starting July 8 — all because of speculation it might acquire PTC, a rival in the industry. That news triggered a sharp sell-off — the textbook kind of move we look for as mean reversion traders. Then came the twist: on Monday, Autodesk filed a business update with the Securities and Exchange Commission that all but shut down the idea of a big acquisition. The stock bounced immediately, but the full recovery hasn't happened yet — and that creates an opening for a smart, well-timed entry. Even though this setup stands strong on its own, I still like to check the RSI (relative strength index) for an extra layer of confidence. RSI is a classic momentum gauge. When it dips below 30, the stock is considered oversold — but the real signal comes when it starts climbing back out. In ADSK's case, RSI just popped off that oversold level, giving us a potential green light that momentum is shifting back to the upside. The trade setup: ADSK 295-300 bull call spread I'm approaching this mean reversion setup in ADSK using a bull call spread — a simple yet effective options strategy that limits downside risk while still offering solid return potential. The beauty of this setup is how flexible and capital-efficient it is: you can get positioned for around $250 and easily scale it up by adding contracts as the trade progresses. To put it in perspective — 10 spreads would cost about $2,500, with the potential to double that if ADSK closes at or above $300 by expiration. If the stock dips a bit more and drops below $295, there's a higher risk/reward opportunity by shifting the structure slightly and opening a $290–$295 call spread to take advantage of the lower entry point. Here is my exact trade setup: Buy $295 call, Aug 8 expiry Sell $300 call, Aug 8 expiry Cost: $250 Potential Profit: $250 -Nishant Pant Founder: Author: Mean Reversion Trading Youtube, Twitter: @TheMeanTrader DISCLOSURES: Nishant has a 295/300 bull call spread on ADSK, expiring on Aug. 8. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
CNBC
01-07-2025
- Business
- CNBC
A low-risk options trade on this IT services stock that recently sold off
Today, I'm diving into a trade setup that's not only low-risk but also a great way to get hands-on experience with options — risking as little as $50 per trade. Okta recently experienced a steep 35% sell-off over just 22 days, despite beating both earnings and revenue estimates. The drop was triggered by a cautious forward outlook, but this kind of sharp move looks like a classic overreaction. That said, just because a stock is oversold doesn't automatically make it a buy — markets can remain stretched in either direction longer than expected. This is where technical analysis becomes critical. By layering in a few key indicators, we can start to assess whether a potential reversal is actually taking shape. For this trade, I'm relying on two technical tools: MACD The Moving Average Convergence Divergence (MACD) is a reliable indicator for spotting trend reversals. I'm using the standard settings (12, 26, 9), which are widely followed. While MACD is technically a lagging indicator — meaning signals often show up after the trend has begun to shift, its crossovers are usually quite dependable. In the chart below, the blue line is the MACD line and the yellow is the signal line. I've highlighted prior instances where a bullish crossover (blue crossing above yellow) accurately marked trend changes. In OKTA's case, this crossover just occurred on 6/27, signaling that momentum may be shifting. RSI The Relative Strength Index (RSI) is another go-to tool for measuring momentum and identifying potential reversals. For the past month, OKTA's RSI has been stuck in a tight range, reflecting a lack of clear direction. But on Friday, RSI broke out of that range, suggesting the end of the consolidation phase and the possibility of a new trend emerging. These kinds of setups are broken down in detail in my book Mean Reversion Trading , which you can check out here . You'll also find hundreds of real-world examples on my site . The trade setup: OKTA 99-100 bull call spread To establish a bullish position on OKTA, I'm using a bull call spread. With the stock trading near $99.60, the setup involves buying the in-the-money (ITM) $99 call and simultaneously selling the $100 out-of-the-money (OTM) call — combining both legs into a defined-risk trade. As the stock moves, this position can be scaled by adding additional spreads. For instance, if OKTA dips to $98, a new $98–$99 spread can be layered on to capitalize on the pullback while keeping risk in check. Here is my exact trade setup: Buy $99 call, Aug 1 expiry Sell $100 call, Aug 1 expiry Cost: $50 Max Profit: $50 Max Loss: $50 If OKTA is trading at or above the short strike ($100) by expiration, this trade has the potential to return 100% on the capital risked. For instance, with 50 contracts, the trade involves risking $2500 to potentially gain $2500. As OKTA rebounds, traders can ladder into the position, gradually increasing exposure to capitalize on a recovery rally. -Nishant Pant Founder: Author: Mean Reversion Trading YouTube, Twitter: @TheMeanTrader DISCLOSURES: Nishant has an OKTA 99-100 call spread expiring on Aug. 1. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
CNBC
24-06-2025
- Business
- CNBC
Using options to buy the dip on this credit card name while hedging risk
Markets are packed with knee-jerk reactions, and the entire idea behind mean reversion is to spot these overreactions and take a contrarian stance — stepping in with a trade in the opposite direction. When you layer options on top of this mindset, you can build a powerful and structured trading system. I dive into the full strategy in detail in my book Mean Reversion Trading , and you'll find tons of real-world trade examples on my site . For this particular setup, I'm focusing on Mastercard (MA) . Last week, both Mastercard and Visa were under pressure after news broke about the stablecoin bill — a classic knee-jerk reaction that now presents a solid trading opportunity. For the MA trade, I'm using the following technical indicators to build out my thesis: Support & resistance: Support and resistance zones are often straightforward to identify, and in MA's case, there's clear long-term support around the $530 level. The stock is starting to show some resilience at this area, hinting that buyers are stepping in. DMI (directional movement index): The DMI is made up of three key lines: DI+ (green), DI- (red) and ADX (blue), which measures trend strength. Generally, a downtrend is indicated when DI- sits above DI+. But when these lines start to reverse course, it can be an early sign of a shift in momentum. With MA, we're now seeing DI+ pushing higher while DI- is tapering off — a signal that bullish sentiment may be building and bearish momentum is losing steam. This pattern often points to a potential trend reversal in the making. RSI (relative strength index): RSI is a go-to momentum indicator used to spot both trend continuation and reversal zones. When RSI falls below 30, the stock is considered oversold — and a move back above 30 is often seen as a reversal trigger. In MA's case, RSI just bounced off that oversold territory, adding another layer of confirmation to the setup. The trade setup: MA 550-555 bull call spread To play this mean reversion setup, I'm going with a bull call spread — a risk-defined options strategy that keeps capital exposure low while offering solid upside potential. This setup lets me get started with as little as $250, and it scales easily by increasing the number of contracts. For example, running 10 contracts puts $2,500 at risk with the potential to earn $2,500 in profit — assuming MA trades at or above $555 by expiration. The stock gapped up this morning but is giving up some of its gains, which could generate a trading opportunity. Assuming MA drops slightly below $555, the spread is structures by purchasing the $550 call and selling the $555 call. It's a clean, efficient setup that gives me directional exposure while keeping risk fully contained. Here is my exact trade setup: Buy $550 call, July 18 expiry Sell $555 call, July 18 expiry Cost: $250 Potential Profit: $250 -Nishant Pant Founder: Author: Mean Reversion Trading Youtube, Twitter: @TheMeanTrader DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
