I’ll take a Slice of TOST Please

BY BILL GRIFFO

November 18, 2023

Each week, I’ll give an overview of a stock and Licia Leslie will follow that up with a chart analysis the next day. Bill Griffo will chime in with macro analysis and Andrew Giovinazzi will then finish out the week with a volatility breakdown.

Have a stock YOU want us to review? Email my team here. – Mark

Hey Trader,

Saying Toast Inc (Ticker: TOST) got burnt after an earnings report that beat on both Earnings and Revenues is an understatement …

The stock dropped 20% post earnings and is now looking a bit undervalued …

Management has the right approach, which is to take advantage of two major forces in the restaurant industry …

Adoption of cloud deployed point of sales (POS)
Add high tech operating efficiencies to offset margin compression.

Now let’s take a look at a low cost/high return strategy …

TOST has done a round turn from $12 to $27 and back … Notice the profile distribution on the left of the chart …

If TOST just hangs on and fills in some volume down between 12 – 16 for a while it will round out a normal bell-shaped curve and be ready for a trend higher in the new year …

I would like to see one more low, which would trigger a bullish RSI reversal pattern, meaning price makes another new low, while RSI makes a higher low.

If you like TOST I suggest a risk/reversal where you sell a Jan19 12.5 put and buy a 16 call for zero cost … My condition would be that the stock makes a new low and you can enter the trade at flat.

The ideal scenario would be some tax selling in the stock into December and you enter the trade by mid-December and let the good times roll!

Power Income is all about analyzing Fed/Gov’t policy, technical and option positioning analysis to execute low risk/high reward trades …

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Live and Trade With Passion My Friend,

Bill Griffo