Options Corner: DELL Rallies Nearly 300% Y/Y, Will Earnings Continue Run?

**SPEAKER_1** (0:00)
Time now for Options Corner. Joining us to take a deeper look at the chart is Tom White. Tom, this one had monster performance this year. I can see why they're coming out with a hold rate, because they're like, wow, maybe all the good news is baked in. But what trends should we notice on this chart?

**Tom White** (0:17)
Yeah. First, we're going to take a look at a little wider, broader type of chart here, three-year weekly chart that kind of lays out the plan of what we've seen for Dell over the last three years. Remember, this stock was trading below 70 bucks a share about three years ago. We've had gains of over 550%.
But you can see, it was kind of just trudging along around 100, between maybe 70 and 140 or so, until the last couple of earnings events. And this is all based on the AI spend that's out there, Dell taking advantage of that. If you look at their AI revenue from last quarter, when the stock jumped over 33% on those earnings, it was up over 750% on a year-over-year basis, just on the AI component of their earnings. So you've seen this parabolic move to the upside, hitting all time highs above 514 just a couple of weeks ago here. We pulled back a little bit from that. But this gives you the scale of what AI means to this company, as all these hyperscalers continue to spend money and build out. Now, I've got a shorter term chart that kind of gives you a better idea of what we've seen over the last 12 months here and a couple of key levels of maybe support, how far it's above its couple of simple moving averages. You see here this parabolic move. This is a one-year chart. We're up over 260 percent so far in 2026 Most of those gains coming over the last couple of quarters, 50-day simple moving average. Looks like a good area of support around $434 going into this report here. But you can see the 200-day simple moving average. The parabolic move is put at this 200-day simple moving average around 246
That is approximately about 45 percent below the current share price in the stock. So you can see expectations pretty high going into this report. But based on their last two earnings reports, that's the reason you've seen the parabolic move in the stock.

**SPEAKER_1** (2:19)
Okay. All right. So what's the approach you would take for an example trade?

**Tom White** (2:23)
Well, it's getting pretty lofty on a valuation base is not surprisingly here. So you've got to take that into context. The option market price did in a one-day move of about plus or minus 9 percent in the stock. Stock hit those all-time highs, as I mentioned, about $514.
But we've pulled back a little bit here. So if you look at the RSI, it's starting to wane a little bit. It's about the 55 level. Overbought's above 70, oversold's below 30 So we're right in the mid-range there, as we've seen a little bit of consolidation. So we looked at a strategy that takes advantage of this higher implied volatility going into the report for a neutral to bullish stance here, taking advantage of that high IV. I went out to the September 4th weekly options that expire in just three days. Really short-term positioning and earnings type play here. Where I'm gonna sell it out of the money call vertical. I'm gonna sell the 490 call and then buy the 500 strike call.
So, just a short $10-wide neutral-to-bearish call vertical. You're gonna collect roughly, if the stock opens up here, about $453.
Looks like it's pulling back just a little bit in the pre-market. Collect that 240 credit. That's what you can make, $240 per spread, with about $760 in risk. Well, why do I have more risk than potential reward on this type of trade? Well, it's based on probabilities, right? That $490 strike call that I'm selling, it's got a probability of about 73% that it will be out of the money at expiration, which is what you want, right? You sell this for $240, you want the stock to stay below $490, you get to keep the $240 in credit that you collected per spread on it. Now, where was my break even on this one? It's all the way up at $490, $240 to the upside. That's about an 8.5% to 9% cushion to the upside. So, about that one standard deviation move that the option market is pricing in on this type of trade. So, stock goes lower, you profit. Stock consolidates after earnings, you profit. Stock goes higher, you're wrong, and it goes up and stays below $490, $240, you can be profitable on this type of trade. So, three out of four scenarios, you're profitable on this type of trade, taking advantage of higher implied volatility and also the probability of success on this type of trade. See that vol crush post earnings, so even if the stock does rise, maybe goes up to $480, you're gonna see implied volatility levels come in and that'll contract the price of this, so you could always buy it back cheaper also.