Top 10 Stocks to Watch: January 2024

Market update: S&P 500 e-mini futures are up 24.01% for the year to date 

• Trading has been lighter in recent weeks, aligning with holiday patterns, and the market has subtly ascended, reflecting a path of least resistance. 
• After a rapid ascent over four weeks, the market seems overbought, hinting at potential downward corrections, yet there's still a possibility of the S&P 500 advancing towards 5,000. 
• The market's direction in the first two weeks of 2024 will be pivotal in providing clearer insights into its future trajectory. 

Last month we contemplated either a test to the downside from the 4,550 level or continued bullish strength. The market decided a continued rally was the best path forward.

Trading volume has been light this week and last, which is somewhat expected through the holidays and new year. It feels as though the market has listed upward via the path of least resistance over that last week of trading. 

We have come extremely far, very quickly over the last four weeks. At this level, the market feels overbought. Sellers are building up their resistance and the odds of price action heading back down are increasing. However, that does not mean it has to head back down. We could very easily head toward 5,000. 

The first two weeks of trading in 2024 will give us the best answers we are looking for. 

We reference the implied volatility rank (IVR) and monthly IV calculation for this article from the tastytrade trading platform. The equities selected for this list have tight and liquid options markets at the time of writing. It is important to execute trades for opportunities that fit with your trading style and account size. Timing is a valuable tool for successful trading strategies.    

A note on earnings trades 

Earnings trades can be executed the day before or the day of the earnings event. However, earnings trades can also be placed days or weeks before an earnings event, which could lead to early profit taking before an earnings event. Evaluate each trade in a way that allows you to execute the strategy you would like to execute.   

For many of these trades, if you would like to place a trade going into earnings, you have the option to start the position in November options contracts, leaving you the opportunity to roll the position out to December options contracts after the earnings event if you need to defend the position by collecting more time and premium.   

Top 10 stocks to watch in January 2024 

1. Walgreens Boots Alliance (WBA) – 1/4 – Earnings before the open 
2. UnitedHealth Group (UNH) – 1/12 – Before the open 
3. Goldman Sachs Group (GS) – 1/16 – Before the open 
4. Schlumberger (SLB) – 1/19 – Before the open 
5. Ally Financial (ALLY) – 1/19 – Before the open 
6. United Airlines (UAL) – 1/22 – After the close 
7. Halliburton (HAL) – 1/23 – Before the open 
8. Netflix (NFLX) - 1/23 – After the close 
9. Capital One Financial (COF) – 1/25 – After the close 
10. Marathon Petroleum (MPC) – 1/30 – Before the open 

1. Walgreens Boots Alliance

Walgreens Boots Alliance (WBA) operates pharmacy stores, selling prescription drugs, health and wellness products, and offering photo services. 

WBA is currently trading at $37.85, down 29.75% from its 2023 opening price of $26.59. The current IVR on the tastytrade platform is 83.4. The IV in January's contract is 60.7 and February's contract is 50.4. WBA has reported positive net income in four of its last five quarterly reports. 

WBA is a lower cost product to trade so undefined risk positions for medium-sized accounts set up well. The credit received is not excellent, but the ratio to buying power used is. 20-delta short Strangles set up okay. Directional spreads are also an option. 

2. UnitedHealth

UnitedHealth (UNH) provides health care coverage, benefits services, and technology-enabled health solutions. 

UNH is currently trading at $520.63, down 0.86% from its 2023 opening price of $525.13. The current IVR on the tastytrade platform is 38. The IV in January's contract is 22.4 and February's contract is 21.8. UNH has reported positive net income in its last five quarterly reports. 

UNH is an expensive product to trade. Defined risk positions will likely be the best choice for most account sizes. You could set up iron condors with wings as wide as you’d like, for the risk you’d like to take on. Directional spreads will also set up well if you have a directional assumption. 

3. Goldman Sachs

Goldman Sachs (GS) is an investment bank involved in securities, investment management, and financial services. 

GS is currently trading at $384.52, up 11.29% from its 2023 opening price of $345.50. The current IVR on the tastytrade platform is 21.5. The IV in January's contract is 25.5 and February's contract is 23.8. GS has reported positive net income in its last five quarterly reports. 

GS is also an expensive product to trade. Defined risk positions will likely be the best choice for most account sizes. You could set up iron condors with wings as wide as you’d like, for the risk you’d like to take on. Directional spreads could also set up well if you have a directional assumption. 

4. Schlumberger

Schlumberger (SLB) specializes in oil-field services, technology, and project management for the oil and gas industry. 

SLB is currently trading at $52.25, down 0.74% from its 2023 opening price of $52.86. The current IVR on the tastytrade platform is 23.5. The IV in January's contract is 34.1 and February's contract is 34.9. SLB has reported positive net income in three of its last five quarterly reports. 

SLB is a relatively low-cost product to trade, so undefined risk positions set up well since the buying-power-used to credit-received ratio is not terrible. 20-delta short strangles set up okay. At the money, directional spreads are also an option. Earnings will take place after January’s contract expires, so February contracts will need to be used for earnings trades. 

5. Ally Financial

Ally Financial (ALLY) offers financial services, including banking, auto finance, corporate finance, and insurance. 

ALLY is currently trading at $34.73, up 43.22% from its 2023 opening price of $24.25. The current IVR on the tastytrade platform is 12. The IV in January's contract is 44.2 and February's contract is 39.3. ALLY has reported positive net income in its last five quarterly reports. 

ALLY’s IVR is not high, but enough volatility exists in monthly contracts to justify selling premium. ALLY is a relatively low-cost product to trade, so undefined risk positions set up well with a decent credit to buying power used ratio. Iron condors and directional spreads can set up well too, with your preference for direction and amount of risk taken on. Earnings will take place after January’s contract expires, so February contracts will need to be used for earnings trades. 

6. United Airlines

United Airlines (UAL) operates an airline, providing passenger and cargo air transportation services. 

UAL is currently trading at $41.81, up 9.39% from its 2023 opening price of $38.22. The current IVR on the tastytrade platform is 61.2. The IV in January's contract is 44.8 and February's contract is 44.7. UAL has reported positive net income in four of its last five quarterly reports. 

UAL is in a comparable situation to ALLY but with more IVR. UAL is a relatively low-cost product to trade, so undefined risk positions set up well with a decent credit to buying power used ratio. Iron condors and directional spreads could set up well too, with your preference for direction and amount of risk taken on. Earnings will take place after January’s contract expires, so February contracts will need to be used for earnings trades.  

7. Halliburton

Halliburton (HAL) offers oilfield services, products, and solutions for oil and gas exploration and production. 

HAL is currently trading at $36.79, down 5.57% from its 2023 opening price of $38.96. The current IVR on the tastytrade platform is 29.1. The IV in January's contract is 33.4 and February's contract is 35.8. HAL has reported positive net income in its last five quarterly reports. 

HAL's situation is like that of UAL and ALLY. Its IVR is currently more comparable to UAL. HAL is a relatively low-cost product to trade, so undefined risk positions set up well with a decent credit to buying power used ratio. Iron condors and directional spreads can set up well too, with your preference for direction and amount of risk taken on. Earnings will take place after January’s contract expires, so February contracts will need to be used for earnings trades. 

8. Netflix

Netflix (NFLX) provides a streaming service with a variety of TV shows, movies, and documentaries. 

NFLX is currently trading at $491.24, up 64.81% from its 2023 opening price of $298.06. The current IVR on the tastytrade platform is 45. The IV in January's contract is 28.9 and February's contract is 40.5. NFLX has reported positive net income in its last five quarterly reports. 

NFLX is an expensive product to trade. Defined risk positions will likely be the best choice for most account sizes. Iron condors, spreads, and flys could all be set up with your level of risk tolerance. I’ll offer a reminder that having wider wings for spreads (including iron condors) provides a larger window for profit and more opportunities for adjusting. Earnings will take place after January’s contract expires, so February contracts will need to be used for earnings trades.  

9. Capital One

Capital One (COF) is a financial services company offering credit, savings, and loan products. 

COF is currently trading at $131.12, up 41.51% from its 2023 opening price of $92.66. The current IVR on the tastytrade platform is 23.8. The IV in January's contract is 26.8 and February's contract is 31.4. COF has reported positive net income in its last five quarterly reports. 

COF is a mid-priced stock. Undefined risk positions could be set up for medium-sized accounts. 20-delta short strangles set up well. At the money, directional spreads are also an option. You could set up iron condors if you would like to define your risk. Earnings will take place after January’s contract expires, so February contracts will need to be used for earnings trades. COF reports earnings toward the end of January, so you can enter a position earlier and get out before earnings or wait for earnings to be closer before putting on an earnings trade. 

10. Marathon Petroleum

Marathon Petroleum (MPC) engages in refining, marketing, and transporting petroleum products. 

MPC is currently trading at $151.17, up 30.71% from its 2023 opening price of $115.65. The current IVR on the tastytrade platform is 26.5. The IV in January's contract is 29.1 and February's contract is 32. MPC has reported positive net income in its last five quarterly reports. 

MPC is a mid-priced stock. Undefined risk positions could be set up for medium-sized accounts. One standard deviation short strangles set up well. Directional spreads are also an option.

You could set up iron condors if you would like to define your risk. Earnings will take place after January’s contract expires, so February contracts will need to be used for earnings trades. MPC reports earnings at the end of January, so you can enter a position earlier and get out before earnings or wait for earnings to be closer before putting on an earnings trade. 

Ryan Sullivan is an active options and forex trader and programming producer for the tastylive network.

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