Dell Technologies Inc (NYSE:DELL) stock is down 1.4% to trade at $127.37, set to snap a five-day win streak as tech sector headwinds weigh. The Top Stock Pick of 2025 has taken a 10% haircut in the fourth quarter, and is 24% off its Nov. 3, 12-month high of $168.08. The upside is that this pullback has DELL testing a long-term trendline that's historically bullish. 

The trendline is DELL's 12-month moving average, a trendline it has closed above in 80% of the last 20 months. According to Schaeffer’s Senior Quantitative Analyst Rocky White, this has happened nine times over the last 20 years, after which the equity was higher one month later only 44% of the time, but averaging a 25.8% jump. Three months out, DELL's average return was 56%, with a win rate that was positive more than half the time. 

A short squeeze could keep the rally sustained. Short interest is up 11.1% in the most recent reporting period, and the 20.60 million shares sold short account for 6.6% of DELL's total available float. 

Short-term put traders have been out in droves, too, per the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.23, which ranks in the 99th percentile of its annual range. An unwinding of these bearish bets could generate additional tailwinds.

DELL options are affordably priced, too. This is per the stock's Schaeffer's Volatility Index (SVI) of 42%, which sits higher than just 11% of readings from the last year. Additionally, with a Schaeffer's Volatility Scorecard (SVS) of 83 out of 100, the security has consistently realized higher volatility than its options have priced in. 

Oil stocks are moving higher today after the most recent talks between President Donald Trump and Ukrainian leader Volodymyr Zelenskyy regarding Russia and Ukraine. The lack of any major breakthroughs put geopolitical tensions back in the spotlight, boosting expectations for oil demand. At last check, West Texas Intermediate (WTI) crude was up 2.3%. 

APA Corporation (NASDAQ:APA) stock was last seen up 0.4% to trade at $24.27. The stock has pulled back from its recent Dec. 5 one-year high of $27.72, but is finding support at its 80-day moving average near the $24 level. Since the start of the year, APA is holding on to a 5.3% gain. 

Devon Energy Corporation (NYSE:DVN) shares are 1.5% higher to trade at $36.20 at last check. The equity now sports a 10.9% year-to-date gain after an extended climb from its April 9, 52-week low of $25.89.

Option traders may want to take note. APA’s Schaeffer's Volatility Index (SVI) of 36% stands higher than just 4% of all other readings from the past year. Meanwhile, DVN's SVI of 28% ranks in the 1st percentile its annual range, suggesting options premiums are inexpensive.

DigitalBridge Group Inc (NYSE:DBRG) stock is surging today, last seen up 9.9% at $15.30, after news that Japan-based Softbank is in advanced talks to acquire the company for $4 billion in an effort to expand its AI infrastructure. Softbank CEO Masayoshi Son stated that the deal “will strengthen the foundation for next-generation AI data centers, advance our vision to become a leading ASI platform provider, and help unlock breakthroughs that move humanity forward."

Today’s pop has DBRG hovering just below its Dec. 9 one-year high of $15.55. The shares are up 57.3% in just the last month, mostly due to a 45.3% rise on Dec. 5, which was triggered by the start of the Softbank rumors. The equity is sporting a 35.5% year-to-date lead, while the 20-day moving average emerged as support last week.

Options traders are blasting DigitalBridge Group stock after the news. So far, 27,000 calls and 4,948 puts have been exchanged, which is already seven times the stock’s average daily options volume. The March 16 call is the most popular, with new positions being sold to open there.

Some of today’s gains could be attributed to short covering, as short interest represents 6.4% of the stock’s available float. It would take shorts 2.5 days to buy back their borrowed shares, at DBRG’s average pace of trading.

   …After last Monday’s SPX close at 6,817, we officially moved into a bullish seasonal period, with the second half of December averaging a 1.30% return. Coincidentally, a 1.30% advance from the December 15th close would push the SPX into resistance in the 6,900 area, where we saw highs in October and earlier this month...”

            - Monday Morning Outlook, December 22, 2025

The flow of news around the holidays tends to be slower-than-normal, but a stronger-than-expected third-quarter gross domestic product (GDP) report supported stocks last week, conveniently following a historical bullish seasonality script.

In fact, in Wednesday’s shortened Christmas Eve session, the S&P 500 Index (SPX--6,929.94) moved above its late October intraday high at 6,920. This breakout followed unsuccessful attempts to clear the 6,900-century mark earlier this month and was on the heels of a record closing high on Tuesday.

“A Santa Claus rally refers to the sustained increases found in the stock market during the last five trading days of December through the first two trading days of January. Since 1950, during this seven-day trading window, the S&P 500 has gained an average of 1.3% and been positive 79% of the time”

- Santa Claus Rally: What It Is and Means for Investors, Investopedia

Not only is the second half of December a bullish seasonal period, but last Wednesday began a period often marked by a "Santa Claus rally," per the excerpt above. Based on the average move in this seven-day period and the SPX’s Dec. 22 close at 6,878.49, the SPX would be expected to rise to 6,967.91 by Monday, Jan. 5. 

For what it's worth, Santa Claus did not show up for bulls during this period last year, as Christmas Eve close marked a short-term top into mid-January. The SPX’s decline on the day after Christmas last year may have hinted at short-term trouble because Dec. 26 is higher 85% of the time since 1953, per research from Bespoke, the most consistently bullish day of the year. With Friday’s lower close, it remains to be seen if Santa answers the bell for bulls.

Last week was the second time this year that a breakout occurred above a prior all-time intraday AND closing high, after going more than one month without this happening. The first time this occurred was late June, when the SPX went on to trend higher in an orderly way, using its 30-day moving average as support on mild pullbacks as it hit new high after new high before entering a choppy phase that began in late October. This momentum could favor the bulls as the last three trading sessions of 2025 begin this week.

“… remember that quarterly expiration is imminent. The SPX Dec. 31 quarterly expiration 7,000 strike is home to sold calls as part of J.P. Morgan’s (JPM’s) quarterly expiration collar strategy executed at the end of each quarter. This implies that if the SPX breaks out above the 6,900-level by year end, the 7,000-millennium mark could be a significant speed bump from both a psychological and options-related vantage point”

            - Monday Morning Outlook, December 22, 2025

With new highs last week, there is little in the way of technical resistance overhead. Potential option-related resistance at SPX 7,000 lingers into quarterly expiration on Dec. 31, however. This 7,000-millennium mark is just 70 points overhead, or about 1% above Friday’s close. If the SPX explodes through 7,000 this week, the area around 7,058 could be resistance, as this level is 20% above last year’s close. Round year-to-date percent return levels tend to mark important hesitation or pivot points, as we saw in August and September when the SPX approached the level 10% above the 2024 close.

If this is a failed breakout that pushes the SPX back below the late-October highs, the first level of support is in the area of 6,760 (early October resistance) and 6,790 (site of the 30-day and 50-day moving averages).

“The huge short interest on SPX components has and continues to be one of the biggest sentiment-based arguments for bulls in the context of the SPX hitting new all-time highs,,, In order for the next stage of major short covering on a rally, the SPX must move through resistance…”

            - Monday Morning Outlook, December 15, 2025

Last week, I reasoned that amid the bullish seasonality, I wouldn’t be shocked if the SPX remained locked in its range, as I suspected there was little cash on the sidelines that could be supportive of a rally above resistance. After all, fund managers are sitting on low cash levels and if the action in the equity options market is indicative of short-term traders’ positioning, there was little cash from this group to fuel a rally.

But I said two weeks ago that if a breakout did occur, the shorts were a potential source of fuel to keep the rally going. Per the latest data on short interest that was released last week by the exchanges as of mid-December, this source of fuel grew larger. Note in the chart below that an increase of short interest on SPX components by 2.5% to a new multi-year high.

Moreover, with the SPX nearly 18% above its 2024 close, total short interest on SPX components is up 45%. In other words, the theme that was evident going into this year remains a major theme going into 2026 – a highly shorted market that could contribute to short-covering rallies at various times or contribute to shallow or brief pullbacks as shorts using such pullbacks to cover losing positions.

Thank you for checking in on my market views from week to week. I hope you are enjoying the holiday season, and I wish you and your families a Happy New Year! I look forward to guiding you through 2026 by providing insight into the risks and rewards from technical and sentiment-based perspectives.

Covered calls let investors earn income from stocks they already own by selling the right to buy them at a set price. 

The covered call options strategy is available when you buy 100 shares of a stock with the intent to sell your shares by writing a call option. In exchange for obligating yourself to sell the shares, you're paid a premium by the call buyer. This strategy is often used within retirement accounts to generate income and act as a hedge to downward moves in stocks.

The covered call is generally the first option strategy that long-term investors use because the benefits outweigh the minimal risk of being forced to sell their shares at a higher price. Covered calls are also typically the first level of options that will be approved by a broker on a trading account. While this strategy may not be the greatest fit for a younger investor, people who are nearing retirement might welcome this sale of their stock, especially when they collect income on top of the sale of the stock.

Understanding Covered Calls

Covered calls can be a bit confusing to wrap your head around at first, but it is quite an easy strategy to use. To simplify this strategy, let’s look at an example using the stock AAPL.

Let’s assume that you own 100 shares of AAPL stock at $100 per share. You can sell a $120 strike call on AAPL that expires in 30 days and receive $100 ($1 per share) in premium. Although no additional money is tied up to make this trade, you are obligated to sell your shares at $120 even if it stretches higher.

Two things can happen after placing this trade. Either AAPL stays below $120 at the end of 30 days, and you keep your shares and the $100 as income or AAPL goes above $120 per share at the expiration date. At that point, you are forced to sell your 100 shares at $120 per share and still get to keep the $100 income.

Regardless of the scenario, you get to keep the $100 as income in your account, as if it was an unqualified dividend payment

The Potential Risks to Selling Covered Calls

When learning about any type of options strategy, you must be aware of any additional risks you are taking with your portfolio. Covered calls don't require any additional capital, given that you have 100 shares or more of a company in your account, but this does not mean there is no risk added. The worst thing that can happen when you sell a call is the stock goes far above the strike price at which you promised to sell your shares.

So, with our example, let’s say that AAPL went all the way up to $200 and you were short a $120 strike call. You would miss out on $80 per share worth of gains. Sure, you still make money, but when you look inside your account, you will see a huge unrealized loss on the call option that you sold. To recap, although your account value went up, you still lost money by selling the call option. Overall, increasing profit on the shares you own to cover the losses on the call.

Key Takeaways Before You Trade

Learning how to trade the covered call is one of the best ways to introduce yourself to the world of options. Whether or not you decide to use them actively, understanding the opportunities involved can be a game-changer for your portfolio. This strategy can be very useful when you are long 100 shares of stock, and you believe that the stock is overvalued but you do not want to sell any of your shares.

If you decide to sell a covered call and you are right and the stock falls then you hedge yourself on the way down and receive some cash to potentially buy more shares. Even if you are wrong and the stock continues up there is a good chance that you are still going to make money. Option selling strategies generally do not require you to be great about picking a direction in which the stock will move since you are receiving income regardless of what happens.

Subscribers to Schaeffer's Weekend Trader options recommendation service received this DECK commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

Footwear stock Deckers Outdoor (NYSE:DECK) gapped to a two-year low in early November following its Oct. 24, 15.2% post-earnings drawdown. Despite rallying back to that pre-earnings close, the shares are now running into overhead pressure at their 200-day moving average. What’s more, the equity sits firmly in "overbought" territory, per its 14-day Relative Strength Index (RSI) of 72.3.

 

 
Shorts have covered nearly half their positions from August to October, but DECK has failed to surge, underscoring its technical weakness. Short interest is building once again, though, and may become more active in terms of shorting rallies.
 
Our recommended put has a leverage ratio of 3.8, and will double on a 22.4% drop in the underlying equity.