Home Depot (HD) Options Signal Bullish Bias: Key Strike Levels and Trade Setups for Jan 16 Expiry

• Options data shows heavy call open interest at $385 and $380 strikes for Friday expiry.
• Technical indicators hint at a short-term bullish trend with RSI near overbought territory.
• Recent AI partnerships and housing policy news could fuel near-term momentum.

Here’s the core insight: Home Depot’s options market is pricing in a strong upside bias ahead of Friday’s expiry, with call options dominating the landscape. The stock’s current price action and technical setup suggest a potential breakout above key resistance levels. Let’s break down what this means for traders.

Bullish Sentiment in Options Implies a High-Probability Move

The options chain tells a clear story: traders are heavily loading up on calls at the $385 and $380 strikes (HD20260116C385 and HD20260116C380) for Friday expiry. These strikes have open interest of 3,624 and 2,608 contracts respectively, dwarfing put activity at the $345 and $320 levels. The put/call ratio of 0.78 (based on open interest) reinforces this bullish tilt.

But here’s the catch: while the call-heavy positioning suggests a strong conviction in an upside move, the lack of significant block trades means we’re seeing retail and institutional activity, not a single whale moving the needle. This could mean the move is broad-based but not necessarily driven by a major catalyst yet.

News Flow Aligns with Options Sentiment—But Valuation Concerns Linger

Home Depot’s recent partnership with Google Cloud to launch agentic AI tools is a major headline. These tools, including the Magic Apron assistant and AI-powered product list builders, position the company to capture more of the home improvement market. The Trump housing plan and Fed rate cuts also add tailwinds, as lower borrowing costs could boost DIY and professional projects.

However, valuation metrics like the DCF analysis ($278 intrinsic value vs. $376 price) and a P/E ratio above industry averages suggest the stock is trading at a premium. This means any rally might be more about momentum than fundamentals—ideal for options plays but less so for long-term stock buyers.

Actionable Trade Ideas for Both Stock and Options

For options traders, the most compelling setup is the HD20260116C385 call. With the stock currently at $376.10 and the intraday high at $376.42, a breakout above this level could trigger a move toward the $385 strike. Given the high open interest, this call could see a liquidity boost if the price action confirms the bullish bias.

For stock traders, consider entry near $374.64 (previous close) with a target at $385. If the stock fails to hold above $369.25 (intraday low), the $345 put (HD20260116P345) becomes a safer bet. For a longer-term play, the HD20260123C380 call (next Friday expiry) offers a slightly cheaper premium with room to run if the AI and housing narratives gain traction.

Volatility on the Horizon: What to Watch

The coming days will test whether Home Depot can sustain its momentum. A close above $376.42 (Bollinger Upper Band) would validate the bullish case, while a drop below $369.25 could trigger a retest of the $357.87 (200D support). The key takeaway? This is a stock with clear direction in the short term, but valuation risks mean the move might not last forever. Position accordingly, and keep an eye on the housing market’s response to rate cuts as the ultimate catalyst.