Build-A-Bear Workshop (NYSE: BBW) is showing signs of a possible upward trend after breaking out from a downward trendline. This change suggests that more investors might be getting interested, especially with the holiday season approaching. The stock has already gained over 25% since its earnings report earlier this month. Filling in the gap created before the earnings release indicates strong buying interest. As a popular brand for stuffed animals, Build-A-Bear tends to be more recognized during the holidays. From a technical standpoint, the stock could increase another 11% before hitting its first major resistance level, a high pivot point from October. Knowing these levels is crucial for staying calm during price fluctuations. However, since Build-A-Bear Workshop is a smaller company, its stock can be more volatile, leading to quicker price changes. Because of this, effective risk management is essential when trading its stock. While there are opportunities, staying disciplined is key for long-term success. As we approach the end of 2025, Build-A-Bear Workshop shows a promising technical setup. The recent break from its downtrend suggests momentum may be shifting favorably. This is a good time for derivatives traders to consider positioning for a potential rise in the coming weeks, especially with the strong seasonal support. This positive outlook is backed by the company’s earnings report from early December 2025, which revealed a 4.5% increase in year-over-year revenue and optimistic guidance for the holiday quarter. This aligns with the National Retail Federation’s November 2025 report, forecasting a solid 3.7% growth in holiday spending. The economic climate appears favorable for a specialty retailer like Build-A-Bear. Given this forecast, one strategy is to buy call options that expire in late January or February 2026. This allows us to benefit from a potential rise toward the October 2025 resistance level while managing our risk. It’s best to choose strike prices just below that key pivot high to maximize returns if the stock continues to climb. However, we should keep in mind that the stock’s implied volatility is high, currently near 68%, which is at the top of its 52-week range in 2025. This makes buying options more expensive. A smarter approach might be to use a bull call spread, where we buy a call and sell a higher-strike call to offset some of the costs. This strategy limits our potential gains but increases our chances of making a profit. For traders willing to consider owning the stock at a lower price, selling cash-secured puts is another good option. After the stock’s recent 25% rally from December 2025 lows, we could sell puts with a strike price below the current support level. This way, we can collect premiums while taking advantage of high implied volatility, providing a safety net if the stock takes a dip.

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