Home Depot (HD) Options Signal Bullish Breakout Potential: Focus on $362.5 Call and $335 Put as Volatility Nears Key Inflection Point

• HD surges 2.5% to $359.95, breaking above its 30D MA but still 17.7% below its 52-week high
• Options market shows heavy call open interest at $362.5 and $370 strikes, while puts dominate at $335 and $350
• UBS analysts back a $430 price target, but Q3 earnings cuts and legal investigations cast shadows

Here’s the thing: HD’s options activity and technicals are painting a clear picture—traders are pricing in a potential breakout above $362.5, but the stock still faces headwinds from weak fundamentals. Let’s break down what’s really happening.

The Options Imbalance: A Battle Between Optimism and Caution

HD’s open interest tells a story of divided sentiment. Calls at the $362.5 strike (OI: 2,839) and $370 (OI: 2,185) show strong bullish conviction, especially with the stock hovering near its intraday high of $362.705. But don’t ignore the puts: the $335 strike (OI: 2,762) is a major support level, suggesting some hedging against a potential drop below the 30D support of $350.63. The put/call ratio of 0.88 for open interest leans slightly bullish, but the heavy put volume at next Friday’s $340 strike (OI: 2,604) hints at lingering caution. Think of it like a tug-of-war—bulls are pushing higher, but bears aren’t backing down.

News vs. Options: Can Strategic Moves Offset Earnings Woes?

UBS’s bullish take on HD’s AI tools and Pro customer expansion makes sense, but it’s hard to ignore the Q3 earnings report. The 5% EPS guidance cut and contracting margins are real red flags. The recent 6.02% post-earnings drop shows investors are pricing in risk. Here’s the catch: the options market isn’t fully discounting the UBS optimism. If HD can surprise to the upside in Q4 (especially with holiday sales), the $362.5 call could ignite. But if housing market weakness persists, those puts at $335 might get exercised. The key is whether management executes their $1.1T addressable market plan—talk is cheap, execution is everything.

Actionable Trades: Calls for Breakouts, Puts for Protection

For options traders, the HD20251212C362.5 (this Friday’s $362.5 call) is a high-conviction play if you believe in a short-term breakout above $362.705. A cheaper alternative? A bull call spread with HD20251212C362.5 and HD20251212C370 to cap risk. On the stock side, consider entries near $350.63 (30D support) or $366.98 (200D resistance). If you’re bearish, the HD20251212P335 put offers downside protection, but watch for a break below $353.94 to confirm bearish momentum.

Volatility on the Horizon: Balancing Hope and Realism

HD’s technicals are mixed—RSI at 61.37 isn’t extreme, but the MACD histogram turning positive suggests momentum could shift. The real test comes this week: can HD hold above $353.94 to validate the bullish engulfing pattern? If it fails, the $335 put-heavy zone becomes critical. Either way, the options market is pricing in a volatile finish. This isn’t a long-term buy—it’s a high-stakes game of chess with $362.5 and $335 as the key squares. Stay nimble, and don’t let hope turn into stubbornness.