Adobe (ADBE) with a strong move the last two weeks and the October $385 calls we profiled on 5/3 have climbed 200% in three weeks. There is also a good lesson here as shares fell hard a couple days first but the position did not close/adjust. When positioned at this size and longer-term timeframe it is important to trust the flow and not panic, but also shows how one can choose more optimal entries often to even see greater gains than these sizable positions.

I originally wrote on 5/3:

“Adobe (ADBE) on 5/1 with a large buy of 1700 October $415 calls for over $3.2M and a name with over 3000 June $350 calls in open interest, 1000 June $340 short puts and on 2/23 October $345 puts sold to open 500X. ADBE shares jumped on earnings in mid-March and drifted higher stalling near the February high and in a consolidation pattern. ADBE needs to clear the $385 level and then could test VWAP off the 2021 highs at $402.30 while the 38.2% retracement is at $438.25 and 50% at $488.50. ADBE needs to hold this key volume node and 21-week EMA in the $362-$364 zone or risks working back to VWAP off the lows at $335. Adobe is one of the largest and most diversified software companies in the world with Digital Media, Digital Experience and Publishing/Advertising key segments. ADBE is attempting to acquire Figma for $20B to reignite growth but the deal is facing plenty of scrutiny from regulators. ADBE has a market cap of $166B and trades 21X Earnings, 17.8X EBITDA, 8.7X EV/Sales and 22.75X FCF. ADBE revenues are seen rising 9-12% annually the next three years with 13-15% annual EPS growth, a quality grower. ADBE is coming off a strong quarter beating on new ARR and operating margins in a tough spending environment. Without Figma in the mix, the growth equation is more difficult and Adobe likely decelerates to low double-digit growth (10-12%), with limited room for margin expansion. Adobe remains confident in the Figma acquisition closing in 2023. If Adobe receives an unfavorable response following the second request, management acknowledged the potential to not know the outcome of a suit until November. However, a favorable response could improve visibility on the overhang as early as the summer. Adobe’s Digital Experience Summit showcased how the company is capitalizing on vendor consolidation & AI trends. Firefly is Adobe’s own creative generative AI model that can generate images and text effects. Analysts have an average target of $400 with short interest low at 1% of the float. RBC raised its target to $415 recently saying Adobe is well positioned in AI and could be a positive for investor sentiment. Wolfe has a $420 target and is confident the Figma deal closes.”