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[Options] They Shop Online in Asia Too!

August 19, 2024

In today's Flow Show, Steve Strazza and I assess the current market environment, post- whatever the hell we're calling what happened a couple weeks ago (Volmageddon 2?, Yen YoYo? The Carry Drop?).

It feels more and more like that was merely a footnote to an otherwise pretty robust bull market. We'll see.

Regardless, we're looking for bullish setups in this tape and an online retailer out of South Korea has our attention.

Here's a chart of Coupang $CPNG:

On the far left of the chart is the IPO. And the trendline you see is the Anchored VWAP from the IPO day.

We like how $CPNG is holding above the AVWAP for the first time since its IPO. The stock built a solid base much of this year, and it looks like it's starting to emerge higher.

Additionally, we feel like the options market is offering us an attractively priced leveraged bet to get involved for a potential run back to fresh new all-time highs.

Here's the Play:

We like buying the $CPNG February 25 calls for approximately $2.00 per contract. This premium we pay today is the most we can lose in a worst-case scenario and we'll size our position according to this math.

And as long as $CPNG can hold above $21 per share, we like our odds that the base continues to build strength for an eventual liftoff and we'll continue holding the positions (with the caveat that I'll close the calls if they lose 50% of their value to protect what's left of my capital). Any close below $21 per share invalidates our thesis and we'll exit.

Meanwhile, if we're lucky enough for $CPNG to print a new high, I'll use that opportunity to sell enough of the position to pay me back for my original investment, and hold on to the rest to see how far we can go.

If you have any questions on this trade, please send them here.

If you missed my most recent ASO video Jam Session, you can catch a replay on Stock Market TV.

~ @OptionsSean

P.S. We do trades like this regularly. If you'd like to leverage Best-in-Class technical analysis into smarter directional options trades, try out All Star Options Risk Free! Or give us a call to learn more: 323-421-7910.