2 stock picks to consider in 2026

00:00 Josh

Markets are struggling for gains on this second day of the Santa Claus Rally period. We are looking for ways to play the market with the Options Playbook sponsored by Tastytrade. And joining me now is explosive options technical analyst Bob Lang. Bob, it’s always great to see you. I know there are two trades for us, Bob, but I’m wondering before we get there, we’re finishing the year, heading into 2026. How do you want to be positioned overall here, Bob?

00:23 bob lang

It’s great to see you, Josh. Happy holidays to you and the Yahoo team out there. We actually want to position ourselves to have plenty of cash coming in 2026, and I’ll tell you why. Because the market is very comfortable right now. We see that the volatility index covers a level close to 15%, which is a bit low. Last week we hit a yearly low of less than 15% and, you know, that makes me a little nervous when the markets are really complacent. You know, there’s that old saying, you know, when everyone buys everything in the market, who’s left? And these are the sellers. So, I think having a lot of money and taking some money off the table here. There’s nothing wrong with making a little profit and we’re seeing people doing that today and I think we’ll be doing that next week as well. That doesn’t mean the Santa Claus Rally, which starts on Wednesday, will end badly. Actually, if you look back, Josh, the last two years the Santa rally has been negative. We’ve never had a negative Santa Rally three years in a row. So, while it’s still positive, it may not be as strong as people think.

01:29 Josh

Okay Bob, that’s the general perspective. Let’s move on to the tradesman. Let’s start with Mikron. This stock, Bob, is up nearly 240% in 2025, and analysts still love it, Bob. Even so, almost 90% need to buy this name. What is trading?

01:46 bob lang

You know, Josh, I like a company that tends to prove itself with earnings. And that’s exactly what Micron did when it reported its earnings last week. And I need to tell you something. They also devastated earnings reporting margins, revenue and guidance earnings. So, you know, they knocked it all out of the park. It was a triple cap for Micron’s shares. And of course, this had some advantage. The nice thing about Micron Josh is that the stock is on the rise after a very strong day following earnings. So, you know, I think the stock has a little more upside. I think $300 is kind of a slam dunk here. It’s only five and a half, or about 6%, off the current price. $300 would be a good point. What I was looking at was a Fibonacci retracement level. Um, but I still think there are some more positive aspects beyond that. Why? This is because we saw good, strong call volume in February and March 300 calls. People expect a good rise in the stock at the beginning of 2026. I’m also looking at a call at 300 March, selling at 2850 Jos for about 10% of the stock price. It looks a little rich right now, but let me tell you, the stock is poised to make some big moves and we’ve seen a lot of money coming into Micron. That’s why I love it here.

03:03 Josh

Now let’s finish with another one here. I would like to hear your opinion about Cava. This is a different looking picture, Bob. The stock is down nearly 50% this year. What do you see there?

03:12 bob lang

Yeah, boy, the stock fell really hard earlier this year and over the summer and they couldn’t get out of their way and the sellers really took control of the stock. But lately, Josh, we’ve seen the stock really gain momentum here. We’ve had good volume, we’re seeing some good options flowing. Look, this is definitely not an incredibly bullish chart like Micron, but I still think there’s some bullishness here because it’s so shorted. There’s a huge amount of short interest in the stock, and once the buyers get control of this thing, the short sellers start running for cover and buying the stock, and there’s an explosion to the upside here. So I’m expecting a call on March 60 with an offer to Josh for about $73. This is Cava’s 200-day moving average and we should see some resistance at this level, but still a nice move up to $73, $74, $75 over the next few months would provide a nice return from these March 60 purchases.

04:22 Josh

Bob, it’s always nice to see you, my friend. Happy holidays.

04:25 bob lang

Thanks Josh, great to see you too.