Options Trading: DataDog Is Ready for a Move Up
Here’s an options trade for the software firm.
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A solid move in software-related names like DataDog (DDOG) seem to have more upside. It wasn’t long ago this group was left for dead, the ultimate loser in the AI race to get information to its users.
But as we have known from the past the death of software was premature if not non-existent, as a slew of investors swooped in on the panic from the summer. DataDog is one of those names that pushed higher and never wavered, but the stock has been treading water for months. It is time for a breakout move higher.
Notice the chart shows a pattern of higher highs and higher lows, our textbook definition of an uptrend. A recent test of the 100- and 50-day moving averages at $250 seems to have been successful. The stock has been moving up on better volume, the MACD closer to a buy signal crossover while relative strength has improved.
As for the options, seeing good volume recently on the bid side in the November 300 strike. December 270 calls have also seen interest, while January 2027 is where the big action is at, the 250 and 320 strikes with some recent interest.
I like the DataDog January 300 call here at $27, which is about 10% of the stock price. Expected move on earnings is about $46, so a bullish move up would put our options here nicely in the money.
