Home Depot (HD) Options Signal Bullish Bias: Key Strike Levels and AI-Driven Catalysts to Watch for 2026 Housing Rebound

• Home Depot (HD) trades at $378.24, up 0.88% with volume surging to 2.1 million shares.
• Options market shows heavy call open interest at $380–$385 strikes, while puts dominate at $350–$355.
• Put/Call ratio for open interest is 0.88, favoring bullish positioning ahead of Friday’s expiry.

Here’s the core insight: options traders are pricing in a short-term upside breakout, with technicals and AI-driven news amplifying the case for a measured bullish play. The stock shows upside potential but carries risks if support levels fail.

Bullish Sentiment Locked in Call Options, But Puts Signal Caution

The options chain tells a story of cautious optimism. For this Friday’s expiry (2026-01-16), HD20260116C380 and HD20260116C385 dominate call open interest, with 2,731 and 3,694 contracts outstanding, respectively. These strikes sit just 1–2% above the current price, suggesting traders expect a modest pop before the weekend. Meanwhile, puts at $350 (HD20260116P350, OI: 5,988) and $355 (HD20260116P355, OI: 5,144) show heavy hedging below the 200D MA (373.14).

The 0.88 put/call ratio isn’t screamingly bullish, but it’s skewed toward calls. No major block trades distort the data today, so this is organic retail and institutional positioning. The risk? If HD fails to hold above $357.87 (200D support), the puts could gain urgency.

AI Partnership and Institutional Moves: Fuel or Fizzle?

The news flow is a mixed bag. On one hand, Home Depot’s expanded Google Cloud partnership—agentic AI tools for customer engagement—signals long-term tech bets. On the other, institutional selling (NY Teachers’ 2.7% stake cut) and insider sales ($1.75M by execs) add short-term jitters.

But here’s the twist: the $402.10 average analyst target still implies 6.5% upside from current levels. The AI narrative could juice pro-consumer tools in 2026, especially if housing markets rebound. Retailers like HD often lead such cycles, and the stock’s 2.8% YoY revenue growth in Q3 2025 shows resilience.

Trade Ideas: Calls for Short-Term Pop, Stock for Breakouts

For options traders:

• This Friday: Buy HD20260116C380 at $3.50–$4.00 per contract. If HD closes above $380, the premium could multiply.
• Next Friday: Consider HD20260123C385 as a cheaper alternative if the initial pop fizzles.

For stock players:

• Entry near $344.70 (30D support) if the price holds. Target $378.51 (intraday high) as a first exit.
• Bearish hedge: Sell HD20260116P355 if HD dips below $357.87, capping losses if the AI hype falters.

Volatility on the Horizon: Balancing AI Hype and Housing Realities

The coming weeks will test HD’s resolve. A breakout above $385 could validate the call-heavy positioning, while a drop below $350 would force reevaluation. The RSI at 81.15 hints at overbought conditions, but the MACD histogram (3.58) and bullish Kline pattern suggest momentum isn’t dead yet.

Bottom line: This is a high-probability, low-conviction trade. The AI partnership and 2026 housing hopes are real, but so are near-term profit-taking pressures. Play it smart—size positions conservatively and watch those support levels like a hawk.