As kids game app Roblox finds its footing in the public market, it could be ripe for a trade, TradingAnalysis.com’s Todd Gordon says.
Shares of the app surged nearly 6% on Thursday. The stock has been climbing since Roblox announced a partnership with Hasbro on Tuesday to create new merchandise around the Monopoly and Nerf franchises.
Roblox went public via direct listing on March 10 and boasts a nearly $44 billion market cap.
On its chart, “the pattern that I like here is we have a series of inside bars,” meaning the current day’s price range stayed within that of the prior day, Gordon told CNBC’s “Trading Nation” on Thursday.
“All that means is a little bit of consolidation” before what will likely be a move above prior highs, Gordon said.
“We’ll let the market carry us into a long position here.”
One way to do so could be by using a buy stop order roughly 10 cents above the stock’s prior high to capture the move, cutting losses if the stock falls below $73, Gordon said.
Another way could be to trade monthly options expiring in June — buying the $80 call and selling the $90 call in a bet on clear but contained upside following the May 19 earnings report, he said.
“This is more of a breakout play on a newly issued name,” he said. “I’m going to be looking to add this to my portfolio on a breakout.”
Roblox ended trading at $79.66 on Thursday.