Latest news with #NishantPant
CNBC
4 days ago
- 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.
CNBC
20-06-2025
- Automotive
- CNBC
Using options to buy the recent dip in this used car retail stock
Despite beating earnings estimates and maintaining solid profit margins, Carvana (CVNA) has been under pressure recently, losing more than 9% in the last eight sessions — all on tariff scare headlines. While tariffs are a legitimate concern for many companies, this kind of sharp drop is a textbook example of a knee-jerk reaction — and the market is full of them. As a mean reversion trader, the goal is to identify these overreactions and take the other side when the setup aligns. In this case, I'm using a couple of key technical indicators to spot whether CVNA is setting up for a bounce: RSI (relative strength index): RSI is a flexible indicator that helps identify both trend reversals and continuations. In this case, the signal is pretty clear — RSI reversed course on 6/26 and has been climbing since, suggesting that the recent bearish momentum may be fading. Support/resistance: Support and resistance levels are often simple to spot — and in the chart below, you'll see clear support around the $280 level. What's interesting is that CVNA is starting to bounce right off that zone, reinforcing its significance. MACD (5,13,5): I like to bring the MACD indicator into my analysis from time to time because it's a solid tool for spotting early entry signals. While the standard MACD can lag a bit, I often use a short-term version to catch momentum shifts sooner. A bullish crossover — where the MACD line crosses above the signal line — typically acts as an early signal to consider getting into a trade. In this case, MACD hasn't confirmed the setup just yet, but it's definitely worth keeping an eye on for potential confirmation. The trade setup: CVNA 305-310 bull call spread To take advantage of this mean reversion setup, I'm using a bull call spread — a strategy that allows me to risk as little as $250 per trade and scale up easily by adding more contracts. For instance, using 10 contracts means risking $2,500 for a shot at $2,500 in profit, as long as CVNA closes at or above $310 by expiration — just $3 above its current price. With the stock trading near $307, the trade is built by buying the $305 call and selling the $310 call. It's a simple, defined-risk structure that gives me upside exposure without tying up too much capital. I break down setups like this in detail in my book Mean Reversion Trading , and you can explore tons of real-world examples at . Here is my exact trade setup: Buy $305 call, July 18 expiry Sell $310 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.
CNBC
03-06-2025
- Business
- CNBC
When risk-on sentiment returns, here's an options trade on a stock that may lead the charge
After a strong rebound from the tariff-induced correction, the markets have now been moving sideways for the past three weeks. This kind of consolidation is typical — it's how markets build up energy for the next leg, whether that's higher or lower. When risk-on sentiment returns and money starts flowing into growth stocks, the Magnificent 7 typically lead the charge. As that momentum builds, we can expect several trading opportunities to emerge. One stock that appears to be setting the stage is Meta (META) , which has been range-bound since May 14th and looks poised for a breakout. To confirm this potential setup, I'm relying on several technical indicators that can help validate the breakout and improve the probability of a successful trade. MACD (5,13,5): Since the traditional MACD is slower to react, I often use a short-term MACD to capture earlier entry signals. A bullish crossover, where the MACD line moves above the signal line, can be a helpful early indicator for starting a position. That said, the quicker sensitivity of this version also means it can produce more false positives, so tight trade management is essential. A common approach is to close the trade if the MACD line dips back below the signal line, suggesting momentum is fading. In the case of META, we just saw this faster MACD trigger a bullish crossover on May 30, 2025, offering a potential early entry point. DMI (Directional Movement Index): The DMI (Directional Movement Index) is made up of three components: DI+ (green), DI- (red), and the ADX (blue), which measures overall trend strength. When DI- is above DI+, it generally indicates a downtrend. However, when these lines start to reverse direction, it often signals a potential shift in trend. For META, the DI+ line is spiking sharply upward, suggesting a strengthening bullish trend and offering early confirmation of a possible breakout. Support/Resistance Even without relying on technical indicators, a simple look at price action reveals that META is testing a key resistance zone. A decisive breakout above this level would serve as strong confirmation that the stock is ready to push into the $700s in the near future. The Trade Setup: META 670-675 Bull Call Spread To take advantage of a potential breakout in META, I'm deploying a bull call spread. With the stock trading near $670.90, the position is built by purchasing the $670 call and simultaneously selling the $675 call, creating a defined-risk trade. If META ends up at or above $675 by June 27th, the trade stands to deliver a 100% return on the amount invested. This setup provides a cost-effective way to gain upside exposure while keeping risk tightly controlled. Here is my exact trade setup: Buy $670 call, June 27th expiry Sell $675 call, June 27th expiry Cost: $250 Potential Profit: $250 I explore many such setups in depth in my book, Mean Reversion Trading , and there is a plethora of great examples on my website . -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.
