This Cosmetics Stock Could Be Ready To Break Out

Subscribers to Schaeffer's Weekend Trader options recommendation service received this ELF commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services. 

e.l.f. Beauty (NYSE:ELF) shares recently broke above their September highs at $110 before pulling back below that level during Friday's session, creating a potential breakout-retest setup. The stock's 50-day moving average could provide additional support after serving as a floor during a similar breakout-pullback pattern in mid-September.

 ELF is trading above the $109 level, which represents half its all-time closing high of $218, reached in 2024. Though short sellers have been in covering mode since July, short interest still accounts for 7.7% of the stock's available float, leaving plenty of room for additional covering.

The cosmetics company reported better-than-expected earnings on Nov. 4 and raised its full-year guidance. The shares are also trading above their pre-earnings close of $113.63.

Our recommended January call has a leverage ratio of 5.02 and will double in value on a 20.1% move from the underlying equity.