Top 10 Stocks to Watch: April 2024

Here are the 10 best stocks to watch in April 2024

• The S&P 500's bullish trend continued in March, surpassing 5,300, extending a rally from November without facing significant resistance. 
• In December 2023, the index broke past its previous all-time high of 4,800.
• The S&P 500 could fall back to 4,800 if the rally reverses, despite end-of-2024 projections suggesting a range of 4,950 to 6,000. 

Price action remained bullish in March, stepping to where we are now, just over 5,300.

\This adds another month to our rally spree starting in November of last year. The continued, orderly climb higher appears to indicate buyers steadily looking for strong resistance. So far, that resistance has not turned up. 

In December of 2023, the S&P 500 broke through previous all-time highs just over 4,800, which was set in January of 2022. If the current rally breaks and we develop downside price action, it’s reasonable to imagine sellers aiming for 4,800 with several resistance bands along the way. That's true even though the current expected move for the S&P 500, for Dec. 31, 2024’s contract, ranges from about 4,950 to 6,000.  

It is important to remain consistent and stick to your strategy in trading environments like this because we don’t know when or how the current rally will end. It is possible to skew your options position to your directional assumptions, if you’d like, but picking direction remains just as difficult as it has always been. 

A note on earnings trades 

To capture the bulk of the volatility of earnings announcements, earnings trades are often executed either the day before or on the day of the earnings announcement. However, earnings trades can also be placed days or weeks before an earnings event, which could lead to early profit taking.  

Alternatively, making a trade shortly after an earnings announcement can be a strategic choice to circumvent the binary nature of the event. Evaluate each trade in a way that allows you to execute the position that matches your strategy.   

If you're considering a trade going into an earnings event, one approach is to initiate the position in the monthly options contract that follows the earnings event.

This strategy offers flexibility. Should you need to defend your position—perhaps due to unexpected market movements–you have the choice to 'roll' it out to the subsequent monthly options. Rolling out the position in this way allows you to extend its duration and potentially collect more premium, providing a buffer against market volatility. 
 

 Top 10 stocks to watch in March 2024 

1. Constellation Brands (STZ) – April 11 - Before the open 

2. CarMax (KMX) – April 11 - Before the open 

3. JPMorgan Chase (JPM) – April 12 - Before the open 

4. UnitedHealth Group (UNH) – April 16 - Before the open 

5. Bank of America (BAC) – April 16 - Before the open 

6. United Airlines (UAL) – April 16 - After the close 

7. Netflix (NFLX) – April 18 - After the close 

8. General Motors (GM) – April 23 - Before the open 

9. General Electric (GE) – April 23 - Before the open 

10. International Business Machines (IBM) – April 24 - After the close

1.Constellation Brands (STZ) 

STZ produces and markets beer, wine, and spirits globally. STZ is currently up 12.13% year-to-date. Its current implied volatility rank (IVR) is 24.7, with April IVx at 24.3, May IVx at 20.6, and its liquidity is rated two out of four on the tastytrade platform. 

STZ is an expensive product to trade, so most traders will want to define their risk when taking a position. A 25-delta, five-dollar-wide iron condor sets up well. So do directional spreads. STZ has moderate liquidity and moderate bid-ask spreads of around 10 to 20 cents.  

2. CarMax (KMX) 

KMX is a retailer that sells used vehicles and provides related services. KMX is currently up 12.59% year-to-date. Its current IVR is 43.9, with April IVx at 52.3, May IVx at 41.9, and its liquidity is rated two out of four on the tastytrade platform. 

A one standard deviation strangle sets up well with a decent credit to buying-power-used ratio. Iron condors and defined risk spreads also set up well. A 25-delta, five-dollar-wide iron condor also sets up well. So do directional spreads. STZ has moderate liquidity and moderate bid-ask spreads of around 5 to 10 cents. 

3. JPMorgan Chase & Co. (JPM) 

JPM provides global financial services including banking, investment and asset management. JPM is currently up 16.75% year-to-date. Its current IVR is 42.6, with April IVx at 24.2, May IVx at 23.0, and its liquidity is rated four out of four on the tastytrade platform. 

JPM is an expensive product to trade, so most traders will want to define their risk when taking a position. A 25-delta, five-dollar-wide iron condor sets up well. So do directional spreads. JPM is very liquid and bid-ask spreads are a couple of pennies wide.  

4. UnitedHealth Group (UNH) 

UNH offers healthcare products and insurance services. UNH is currently down 6.35% year-to-date. Its current IVR is 81.6, with April IVx at 25.7, May IVx at 23.3, and its liquidity is rated two out of four on the tastytrade platform. 

UNH is an expensive product to trade, so most traders will want to define their risk when taking a position. A 22-delta, five-dollar-wide iron condor sets up well. So do directional spreads. 

5. Bank of America (BAC) 

BAC offers a wide range of banking, investing, asset management and other financial and risk management products and services. BAC is currently up 12.16% year-to-date. Its current IVR is 19.3, with April IVx at 25.7, May IVx at 25.1, and its liquidity is rated four out of four on the tastytrade platform. 

UAL is a lower-cost product to trade with high liquidity, making it a suitable candidate for undefined risk positions. Those with smaller-sized accounts can consider an undefined risk position, however, in April’s contract the credit received to buying power used ratio is high until you tighten to around 30-deltas. At the money, or deeper, directional spreads set up well too. 

6. United Airlines (UAL) 

UAL operates as a major American airline providing passenger and cargo transport services. UAL is currently up 14.64% year-to-date. Its current IVR is 58.2, with April IVx at 44.9, May IVx at 42.3, and its liquidity is rated three out of four on the tastytrade platform. 

UAL is a lower-cost product to trade with high liquidity, making it a viable candidate for undefined risk positions. Those with smaller-sized accounts can consider an undefined risk position. A 20-delta short strangle sets up well with a decent credit received to buying-power-used ratio.  

7. Netflix (NFLX) 

NFLX offers subscription streaming entertainment service and produces original content. NFLX is currently up 27.57% year-to-date. Its current IVR is 70.3, with April IVx at 50.2, May IVx at 42.6, and its liquidity is rated three out of four on the tastytrade platform. 

NFLX is an expensive product to trade, so most traders will want to define their risk when taking a position. A 20-delta, five-dollar-wide iron condor sets up well. 25-delta directional spreads also set up well. 

8. General Motors (GM) 

GM designs, manufactures, and markets cars, trucks, and automobile parts worldwide. GM is currently up 24.83% year-to-date. Its current IVR is 33.3, with April IVx at 27.1, May IVx at 31.3, and its liquidity is rated four out of four on the tastytrade platform. 

GM is a lower-cost product to trade with high liquidity, making it a suitable candidate for undefined risk positions. Investors with smaller-sized accounts can consider an undefined risk position. A 20-delta short strangle sets up well with a decent credit received to buying-power-used ratio. 

9. International Business Machines (IBM) 

IBM provides information technology (IT) products and services globally. IBM is currently up 16.04% year-to-date. Its current IVR is 103.4, with April IVx at 20.8, May IVx at 29.9, and its liquidity is rated three out of four on the tastytrade platform. 

IBM is an expensive product to trade, so most traders will want to define their risk when taking a position. A 25-delta, five-dollar-wide iron condor sets up well. So do 35-delta directional spreads.  

10. Capital One (COF) 

COF offers a broad spectrum of financial products and services to consumers, small businesses, and commercial clients. COF is currently up 9.15% year-to-date. Its current IVR is 28.2, with April IVx at 24.8, May IVx at 29.9, and its liquidity is rated two out of four on the tastytrade platform. 

COF is a moderately priced stock to trade and medium-sized accounts can consider undefined risk trades. A one standard deviation short strangle sets up well with a decent premium collected to buying-power-used ratio. 20-delta or 25-delta. A five-dollar-wide iron condor set up well too. So do directional spreads with your preferred about of risk. 

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

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