Buying SPOT put contracts.
Spotify Tech (SPOT) is a leading music and podcast streaming company.
The company has a tremendous amount of competition from big names like Apple and Amazon, a talent issue taking management’s attention away from the company’s core business, and a stock price that is trading at well over 100 times 2023 expected earnings.
With high-priced growth names out of favor and investors adjusting to higher volatility, shares of SPOT will likely be cast aside driving the price much lower.
Buying March $190 put contracts gives us time for the trade to evolve. We’ll also get the benefit of close to a $1 for $1 option price movement if the stock drops, while muting potential risk through added time value if the stock rises.