Top 10 Stocks to Watch: October 2023

From American Express to UPS, ten essential tickers for your October watch list

• The S&P 500 is bouncing above $4,300. There's an opportunity for continued downward selling pressure. 
• As we move into October, we anticipate a continued battle between buyers and sellers, potentially leading to a choppy market and rising volatility. 
• Timing the execution of strategies is essential for successful options trading. 

In last month’s update, we discussed the opportunity for the S&P 500 to test the $4,300 level. This week, the S&P 500 has bounced just above $4,300, and we will also find out whether the market wants to jump back up from here or continue to pursue downward pressure. Short-term buying pressure could take us back up to $4,368. 

October volatility is likely

It’s likely that buyers and sellers will continue to battle as we move into October. Choppiness can lead to rising volatility which is a beneficial environment for premium sellers. However, selling pressure has continued since mid-September, and sellers are likely to target the $4,243 level if selling pressure continues. 

The implied volatility (IV) rank and monthly IV calculation for this article is referenced from the tastytrade trading platform. The equities selected for this list have tight and liquid options markets at the time of writing (except for CMG). Execute trades for opportunities that fit with your trading style and account size. Timing is important for successful trading strategies. 

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

If you would like to place a trade going into earnings, you have the option to start the position in October options contracts. That gives you the opportunity to roll the position out to November 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 October 2023  

1. SCHW – 10/16 - Before the open* 
2. UAL – 10/17 - After the close 
3. MS – 10/18 - Before the open 
4. NFLX – 10/18 - After the close 
5. SLB – 10/20 - Before the open 
6. AXP - 10/20 - Before the open 
7. GE – 10/24 - Before the open 
8. UPS – 10/26 - Before the open 
9. CMG – 10/26 - After the close 
10. COF – 10/26 - After the close  

*earnings are released

1. Charles Schwab Corp.

Charles Schwab (SCHW), a leading investment services firm, has a history dating back to 1971. It offers financial services that include brokerage, banking and advisory services, and it caters to individual investors, institutional clients and active traders. The company is known for its client-centric approach and innovative investment solutions. 

SCHW is currently trading at $53.89, down 35.52% from its opening price of 2023 at $83.57. The current implied volatility rank (IVR) on the tastytrade platform is 22.3. The IV in October’s contract is 49.6, and November’s contract is 44.3. SCHW has reported positive net income in all the last five quarterly reports. 

A 20-delta short strangle sets up well with a decent credit to buying power ratio. This is a naked short position that could be taken by small accounts. Short, directional, at the money spreads are also an option.   

2. United Airlines Holdings

United Airlines Holdings (UAL), a major American airline, operates a large domestic and international route network. It offers passenger and cargo services, connecting travelers to destinations around the world. United is recognized for its commitment to customer service and operational efficiency. 

UAL is trading at $42.56, up 11.27% from its opening price of 2023 at $38.35. Its IVR)is 36.6. The IV in September's contract is 49.3, and October's contract is 45. UAL has reported positive net income in four of the last five quarterly reports. 

A 20-delta short strangle sets up well with a decent credit to buying power ratio. This is a naked short position that could be taken by small accounts. Plus, 40-delta short, directional-spreads also set up well. 

3. Morgan Stanley

Morgan Stanley (MS), a global financial services firm, provides investment banking, securities, wealth management and investment management services. Its diverse clients include corporations, governments, institutions and individuals. The company is renowned for expertise in capital markets, investment strategies and financial advisory services.  

MS is trading at $82.57, down 3.7% from its opening price of 2023 at $84.96. The implied volatility rank (IVR) on the tastytrade platform is 39.9. The implied volatility (IV) in October's contract is 33, and November's contract is 31.3. MS has reported positive net income in its last five quarterly reports. 

Short, 25-delta iron condors set up well. Short, directional, at the money or near the money spreads will also set up well.  

4. Netflix

Netflix (NFLX), a dominant player in streaming entertainment, offers TV shows, movies and documentaries. It operates on a subscription-based model, providing content on multiple devices. Netflix is acclaimed for its original content and has revolutionized the way viewers consume entertainment. 

Netflix is trading at $378.09, up 26.85% from its opening price of 2023 at $298.06. The implied volatility rank (IVR) on the tastytrade platform is 35.5. The IV in October's contract is 52.1, and November's contract is 44.5. NFLX has reported positive net income in all its last five quarterly reports. 

NFLX is a large enough product that most traders will want to define their risk for options trades. Short, 19-delta, iron condors set up well. Short, directional, out of the money spreads will also set up well. 

5. Schlumberger

Schlumberger (SLB) is the world's leading provider of technology for reservoir characterization, drilling, production and processing to the oil and gas industry. It operates in more than 120 countries and is known for its commitment to technological development and operational excellence. 

SLB trades at $59.20, up 11.99% from its opening price of 2023 at $52.86. The current Implied Volatility Rank (IVR) on the tastytrade platform is 34. The IV in October's contract is 37.8 and November's contract is 38. SLB has reported positive net income in its last five quarterly reports. 

Short, 25-delta, iron condors set up well. Short, directional, at the money or near the money spreads will also set up well. 

6. American Express

American Express (AXP), a global financial services corporation, is known for its credit card, charge card and traveler's cheque businesses. It caters to consumers, small businesses and corporate clients, offering a range of financial products and services. American Express is synonymous with premium customer service and membership rewards. 

AXP trades at $151.37, up 1.22% from its opening price of 2023 at $149.54. Its IVR on the tastytrade platform is 37.3. The IV in October's contract is 33.3, and November's contract is 29.8. AXP has reported positive net income in its last five quarterly reports. 

Short, 25-delta, iron condors set up well. Short, directional, at the money or near the money spreads will also set up well.  

7. General Electric

General Electric (GE), a diversified industrial conglomerate, has operations in aviation, healthcare, power, renewable energy, the digital industry and additive manufacturing. It has a long history of innovation and developing technologies that drive progress. GE is committed to transforming industries and improving lives through cutting-edge technology. 

GE trades at $109.95, up 67.64% from its opening price of 2023 at $65.59. Its IVR is 44.1. The IV in October's contract is 29.5, and November's contract is 32.5. GE has reported positive net income in three of its last five quarterly reports. 

GE is a large enough product that most traders will want to define their risk for options trades. Short, 25-delta, iron condors set up well. Short, directional, at the money or near the money spreads will also set up well. 

8. United Parcel Service

United Parcel Service (UPS), a global leader in logistics, offers a broad range of solutions including the delivery of packages and freight, international trade facilitation and advanced technology deployment. UPS is known for its reliability, operational efficiency and extensive network, connecting businesses and consumers worldwide. 

UPS trades at $151.80, down 12.89% from its opening price of 2023 at $174.27. Its IVR is 39.2. The IV in October's contract is 24.6, and November's contract is 30.9. UPS has reported positive net income in its last five quarterly reports. 

UPS is a large enough product that most traders will want to define their risk for options trades. Short, 22-delta, iron condors set up well. Short, 30-delta spreads also set up well. 

9. Chipotle Mexican Grill

Chipotle Mexican Grill (CMG) operates a chain of fast-casual restaurants specializing in tacos, burritos, bowls, and salads. It is committed to high-quality raw ingredients and classic cooking techniques. Chipotle is recognized for food integrity, customizable meals and innovative dining experiences. 

Chipotle trades at $1847.62, up 31.94% from its opening price of 2023 at $1,400.30. Its IVR is 55.2. The IV in October's contract is 25.4, and November's contract is 32.9. CMG has reported positive net income in its last five quarterly reports. 

CMG is an exception to this list because it has a low liquidity rating and a very high product cost. For that reason, I recommend only defined risk positions. Getting in and out of this position will also require some price discovery, which should deter new traders who are not comfortable doing that yet. Short, 15-delta iron condors can set up well. Short, directional spreads, for as much risk as you’d like to take, could also set up well. 

10. Capital One Financial

Capital One Financial (COF), a diversified banking company, specializes in credit cards, auto loans, banking and savings accounts. It leverages technology and data analytics to provide innovative financial solutions to consumers, small businesses and commercial clients. Capital One is known for its customer-centric approach and commitment to financial empowerment. 

COF trades at $97.10, up 4.44% from its opening price of 2023 at $92.97. Its IVR) is 38.7. The IV in October's contract is 34.3, and November's contract is 38.7. COF has reported positive net income in its last five quarterly reports. 

A 20-delta short strangle sets up well with a decent credit to buying power ratio. This is a naked short position that could be taken by small accounts. Short, directional, 30-delta spreads are also an option.  

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

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