Trade Alert: Top Names

Another bet on our small cap AI name from last Friday.

Taking Advantage Of Today’s Drop

Ordinarily, I wouldn’t send two separate trade alerts in a row like this—I’d just consolidate the trades into one alert—but I just noticed this opportunity, and I’m committed to letting you know about every trade I place, when I place it.

In a post on Friday, I mentioned selling puts on one of our Top Names from Thursday night.

That stock had shot up 20% overnight after posting an earnings beat. There was an interesting comment in the company’s earnings call: the CEO said he had spent over $3 million on recruiting expenses in the quarter, as they expanded to meet demand, but that he expected to less than a tenth as much the next quarter. The resulting impact on earnings next quarter may surprise some investors who rely solely on screeners to find stocks.

This stock is down about 12% today, so I took the opportunity to place a bet that it regains those losses after next quarter. If we’re right, we’ll make about 200% on this trade; if we’re wrong, our max loss will be 100%.

Details below.

Our Bullish Trade

The stock is Innodata ( INOD 0.00%↑ ), and the trade is a vertical spread expiring on November 15th, buying the $17 strike calls and selling the $18 strike calls, for a net debit of $0.33. The max gain on 2 contracts is $670, the max loss is $330, and the break even is with INOD at $17.33. This trade hasn’t filled yet. This trade filled at $0.33 on 9/6/2024.

Exiting This Trade

I’m going to set a GTC order to exit this spread at $0.90 or $0.95 and lower that price, if necessary, as we approach expiration.