4 Trade Ideas for CVS Health: Bonus Idea

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CVS Health, $CVS, rounded out of a consolidation in November and made a higher high. It pulled back to retest the break out and then rose to a new high in January. It has been pulling back from there and comes into the week after a bearish engulfing candle ending at support. The RSI is pulling back through the midline with the MACD falling but positive.

This is all happening at the 200% extension of the retracement of the pandemic drop. There is support lower at 101 and 99 then 96.25 and 92.50 before 90. Resistance higher sits at 102.60 and 106.30. Short interest is low at 1.2%. The stock pays a dividend with an annual yield of 2.17% and began trading ex-dividend on January 20th. The company is expected to report earnings next on February 9th.

The January 28 Expiry options chain shows biggest open interest at the 98.50 put strike and 102 call. The February 11 chain, covering the earnings report, is biggest at the 103 put and the 110 call. The February monthly options have biggest open interest at the 97.50 strike and then 110 on the put side. It is biggest at 105 and 110 on the call side. The March chain is spread from 115 to 80 on the put side and focused at 105 and 110 on the calls.

CVS Health, Ticker: $CVS

Trade Idea 1: Sell the stock short on a move under 101 with a stop at 103.

Trade Idea 2: Sell the stock short on a move under 101 and buy a February 11 Expiry 103 Call ($2.47) while selling a March 95 Put ($1.81).

Trade Idea 3: Buy the February 11 Expiry 100/97/94 Put Butterfly ($1.35).

Trade Idea 4: Buy the March 100/95-90 1×2 Put Spread (65 cents).

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After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which with January options expiration in the books, saw equity markets off to an ugly start for 2022.

Elsewhere look for Gold to continue higher in consolidation while Crude Oil continues the uptrend. The US Dollar Index continues to drift to the upside in consolidation while US Treasuries consolidate. The Shanghai Composite looks to consolidate as well while Emerging Markets continue the downtrend.

The Volatility Index looks to remain elevated, possibly moving higher, making the path easier for equity markets to the downside. Their charts look weak and trending lower on the shorter timeframe. On the longer timeframe both the QQQ and SPY are shifting into troubled looks. The IWM is now in a downtrend. Use this information as you prepare for the coming week and trad’em well.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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