September 15, 2019 | 11:33 PM by Fahad Khalid | fkhalid@jaguaranalytics.com

Trade Alert: DocuSign (DOCU)

Closing Trade (Sep 6, 2019):

Sell to close DOCU December 50 Calls for $8.50 credit or higher.

We bought these calls for $3.40 on August 5th. Taking full profits here and stepping aside after stock sharply gaps higher by +20% after posting strong earnings last night. Giddy up!

 

 

Opening Trade (Jun 6, 2019):

Trade Alert: eSignature

DocuSign
Ticker: DOCU
Sector: Tech / Software
Current Price: $53.57
First Target: $60+
Stop Loss: $50
Time Duration: 106 days

Trade Idea – Buy DOCU September 57.5 Calls for $3.90 or less.

The bid/ask spread currently is 3.60 x 3.90 and volume currently is zero and open interest is 2,046. Placing the alert on the offer.

Keeping this short and sweet. I usually don’t do this, but ahead of earnings report tonight after market close I’d like to buy straight 3+ month out expiration and slightly out of money calls with delta of 0.45 in anticipation of strong quarter and breakout. Typically when making a play into a catalyst such as earnings, I would structure the spread to take advantage of elevated implied volatility (June currently 59% vs Sept at 45%). But in this case going with straight calls with a view that straddle could be underpricing the potential move.

Last week on May 30th I refreshed the bull case in chat room, see HERE.

After that discussion, earlier this week on June 3rd we saw heavy upside call accumulation particularly in front month June 55 strike where over $1.8 million worth of call premium was bought and now reflected in open interest. See snapshot below. This has skewed the bias with 80% in favor of bulls. Today also we see buyer of 300 January 2020 LEAP 60-strike calls for $4.70 offer and buyer of 200 January 2021 LEAP 65-strike calls for $8.15 offer. Between those two leap strikes approx $300,000 worth of call premium bought and these bets are suggesting traders are looking for big run to upside in long term.

Fahad

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