DailyPlay – Opening Trade (LOW) – August 19, 2025

LOW Bullish Opening Trade Signal

Investment Rationale

Investment Thesis
We have a bullish outlook on Lowe’s (LOW) as the company approaches its earnings report on August 20th. The recent breakout above key resistance suggests improving investor sentiment, with shares now trading in alignment with broader market strength. With Home Depot reporting ahead of Lowe’s, sector sentiment could act as an early catalyst. A strong Lowe’s earnings print would reinforce the breakout and position the stock for continuation toward our $265 upside target.

Technical Analysis
LOW has staged a notable recovery, breaking above its $235 resistance level and now trading firmly above the 20-day, 50-day, and 200-day moving averages. The stock’s momentum has accelerated in recent weeks, reflecting strong relative performance against the S&P 500. The RSI sits near overbought territory but remains supportive of sustained upside, particularly given the sharp improvement in trend structure.The 200-day moving average now serves as a critical support level near $240, while the breakout structure creates a clear pathway toward $265 should earnings act as the next upside catalyst.

Fundamental Analysis
Lowe’s valuation remains modestly discounted relative to peers, despite comparable growth prospects and stronger profitability metrics. This relative undervaluation, coupled with earnings momentum and resilient demand in the home improvement category, provides a constructive setup for further upside.

• Forward PE Ratio: 20.57x vs. Industry Median 23.35x
  
• Expected EPS Growth: 7.21% vs. Industry Median 7.18%
  
• Expected Revenue Growth: 2.86% vs. Industry Median 3.75%
  
• Net Margins: 8.22% vs. Industry Median 6.55%

Options Trade
We recommend a bullish put credit spread to position for continued upside while taking advantage of elevated implied volatility ahead of earnings. Specifically, selling the Sep 19, 2025 $247.5/$240 put spread for a net credit of $2.51. The trade risks $499 to make a maximum reward of $251, offering a 50% potential return on risk. This strategy profits if LOW holds above $247.50 into expiration, aligning with our bullish outlook that earnings strength will reinforce momentum and sustain prices above key support levels.

LOW – Daily

Trade Details

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish Credit Spread

Details: Sell to Open 4 LOW Sep 19 $247.50/$240 Put Vertical Spreads @ $2.51 Credit per Contract.

Total Risk: This trade has a max risk of $1,996 (4 Contracts x $499) based on a hypothetical $100k portfolio risking 2%. We suggest risking only 2% of the value of your portfolio and divide it by $499 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bullish trade on a stock that is expected to continue higher over the duration of this trade.

1M/6M Trends: Bullish/Bullish

Relative Strength: 8/10

OptionsPlay Score: 91

Stop Loss: @ $5.02 (100% loss to value of premium)

View LOW Trade

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that whenever there is a multi-leg option strategy, it should be entered as a single trade. 

PLEASE NOTE that these prices are based on Monday’s closing prices. Should the underlying move significantly during the pre-market hours, we will likely adjust the strikes and prices to reflect a more accurate trade entry. 

View LOW Trade