Toast Soared 5.65%—What’s Brewing in the Kitchen?

Summary
• Toast (TOST) surged to a 52-week high of $49.36 amid heightened earnings anticipation
• IBD 50 designation and post-Friday selloff rebound drive 5.65% intraday gain
• Options volatility surges as 2025-08-08 expiry chain sees $343,338 in turnover

Toast Inc. (TOST) is defying market jitters, rallying 5.65% to $49.2998 as it approaches its second-quarter earnings report. The stock’s sharp rebound from a post-Friday low of $47.07 has ignited speculative fervor, with options traders piling into August contracts ahead of Tuesday’s earnings. This surge, fueled by IBD 50 momentum and a bullish technical setup, marks a pivotal moment for the restaurant software giant.

Earnings Anticipation and Market Rebound Drive TOST Surge
Toast’s 5.65% gain stems from a confluence of factors: its inclusion in the IBD 50 Growth Stocks To Watch list, a post-Friday selloff rebound, and anticipation of explosive Q2 earnings. The stock’s technical rebound from a 52-week low of $22.91 suggests short-term buyers are capitalizing on a 5.65% intraday pop toward its 52-week high of $49.555. With consensus expecting a surge in earnings, the move reflects a shift from bearish short-term trends to bullish positioning ahead of Tuesday’s report.

Application Software Sector Gains Steam as Microsoft Leads 2.32% Rally
The broader application software sector is gaining traction, with Microsoft (MSFT) surging 2.32% and underpinning market optimism. While Toast’s rally is earnings-driven, the sector’s momentum suggests a broader appetite for SaaS plays. Microsoft’s performance highlights the sector’s resilience amid AI-driven growth narratives, though Toast’s near-term focus remains squarely on its earnings catalyst.

Options and Technicals Signal Aggressive Long Bias—Key Plays for August Expiry
• 200-day average: 38.6695 (below current price of 49.30)
• RSI: 63.25 (neutral to overbought)
• MACD: 1.337 (bullish divergence from 1.342 signal line)
• Bollinger Bands: 50.27 (upper), 46.43 (middle), 42.58 (lower) — current price near upper band

Toast’s technicals suggest a continuation of its bullish breakout, with key resistance at the 52-week high of $49.555 and support near the 46.43 middle Bollinger Band. The 5.65% intraday gain has triggered aggressive positioning in August options, with two contracts standing out for their high leverage and liquidity:

• TOST20250808C49: Call option with 49 strike, expiring 8/8. IV: 113.91% (high volatility), Leverage: 17.68%, Delta: 0.5477 (moderate sensitivity), Theta: -0.4654 (rapid time decay), Gamma: 0.0602 (high sensitivity to price movement), Turnover: 36,425. High gamma and moderate delta position this as a top-tier play for a 5% upside scenario (projected price: $51.76, payoff: $2.76).
• TOST20250808C49.5: Call option with 49.5 strike, expiring 8/8. IV: 113.90% (high volatility), Leverage: 19.34%, Delta: 0.5174, Theta: -0.4564, Gamma: 0.0606, Turnover: 15,288. High leverage and gamma make this ideal for a breakout above $49.50, with a 5% upside scenario yielding $2.28 payoff.

Aggressive bulls should consider TOST20250808C49 into a test of the $49.555 52-week high or TOST20250808C49.5 for a breakout play. The latter’s high gamma ensures it reacts swiftly to price movement, while the former’s liquidity ensures smooth execution.

Backtest Toast Stock Performance
The backtest of TOST's performance after a 6% intraday surge shows mixed results. While the stock experienced a maximum return of 5.40% on day 59, the overall win rate for 3-day, 10-day, and 30-day periods was relatively low, with returns of -0.08%, 0.88%, and 1.95%, respectively. This suggests that while there is potential for gains, the stock's performance after a significant intraday surge can be volatile and may not always translate into sustained long-term gains.

Bullish Momentum Favors Aggressive Longs—Act Before Earnings
Toast’s 5.65% surge reflects a perfect storm of earnings optimism and technical momentum. With the stock trading near its 52-week high and options volatility spiking, the near-term outlook remains bullish. Microsoft’s 2.32% sector lead underscores broader software demand, but Toast’s earnings report will be the defining catalyst. Investors should prioritize TOST20250808C49 or TOST20250808C49.5 for leveraged exposure, with key levels at $49.555 and $49.00 to watch. Break above $49.555 could trigger a parabolic move—act before Tuesday’s report.