Options Trades to Watch: Top Analyst Bets on Palo Alto, TJX, and SoFi

• In an interview with YF’s Josh Lipton, Prosper Trading Academy CEO Scott Bauer struck a cautiously optimistic tone heading into 2026, suggesting investors hedge with inexpensive volatility options while still keeping exposure to the broader market.
• He favored “poor man’s covered call” strategies using deep in-the-money calls combined with selling shorter-term calls for income on bullish picks like Palo Alto Networks (PANW), TJX Companies (TJX), and SoFi Technologies (SOFI).
• Bauer highlighted strong upside potential, projecting 25 – 30% for PANW in cybersecurity, 30 – 40% for TJX in discount retail amid consumer trade-downs, and further growth for SOFI in fintech despite its ~80% 2025 gain (with prices reflecting late December 2025 levels).

As 2025 draws to a close, Prosper Trading Academy CEO Scott Bauer shared a cautiously optimistic outlook for the upcoming year in an interview with Yahoo Finance’s Josh Lipton. Bauer emphasized the attractiveness of current volatility levels, noting that they are low enough to justify owning upside exposure while also making protective hedges affordable. This environment allows investors to remain in the market without excessive risk, particularly through options on indices like the S&P or the VIX. Bauer, known for his conservative approach honed from years trading on the floor, recommended hedging positions to balance optimism for 2026 with prudent risk management, especially for those holding positions carried over from the prior year.

Bauer highlighted cybersecurity as a strong sector, favoring Palo Alto Networks (PANW) as the best-in-class name. He described a “poor man’s covered call” strategy, involving the purchase of a deep in-the-money call option – in this case, a 140 strike call significantly below the stock’s price at the time, costing around $50 per contract or $5,000 total – to synthetically own the shares at a fraction of the outright stock cost. This position then enables selling shorter-term call options against it to generate income while retaining substantial upside potential. Bauer expressed confidence in Palo Alto Networks as an outperformer, projecting 25 to 30% upside for the year ahead.

Shifting to retail apparel, Bauer anticipated challenges for the broader sector but saw resilience in mid-to-lower tier discount retailers like TJX Companies (TJX), parent of TJ Maxx and Marshalls. He viewed TJX as well-diversified and positioned to benefit from consumers trading down from higher-end stores amid economic pressures. Bauer applied a similar poor man’s covered call here, targeting a September 120 strike deep in-the-money call costing about $40 per contract, again allowing for income generation through sold calls while maintaining major upside exposure. He forecasted even stronger potential for TJX, estimating 30 to 40% upside.

For fintech, Bauer turned to SoFi Technologies (SOFI), acknowledging its impressive roughly 80% gain in 2025 made this trade somewhat riskier than the others. He outlined a longer-term version using LEAPs (Long‑Term Equity Anticipation Securities), specifically a January 2027 20 strike call purchasable for around $11 per contract, close to parity given the stock’s level. This extended timeframe provides over a year to repeatedly sell shorter-term upside calls for income. Despite the prior run-up, Bauer believed SoFi stood out among newer fintech players with significant growth remaining into 2026.

Bauer’s strategies across these names center on capital-efficient bullish exposure through deep in-the-money calls combined with income from sold calls, aligning with his view of cheap volatility enabling both offense and defense as markets transition into the new year.

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