On CNBC's "Trading Nation," Danielle Shay of Simpler Trading and Craig Johnson of Piper Sandler spoke about high-beta stocks they would buy.
Johnson likes Western Digital Corp (NASDAQ: WDC). He noticed a double bottom pattern on its chart and he said that a close above $76 would start another leg higher. The size of the setup on the chart suggests an upside potential of around 50%, with a measured move objective of $110, said Johnson. The company also had a great earnings print in April and it raised its guidance, he added.
Shay is focusing on Gap Inc (NYSE: GPS), which is due to report earnings on May 27. The stock has high implied volatility going into the report so she sees the opportunity to sell some at the money premium. The options market is pricing in about a $3.5 to $4 move in Gap and the stock usually moves between 25 cents and $2, with one outlier of $4. For that reason, she is just going to trade the report. She is not buying the stock here, but she will be trading it next week.
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