Buying SPLK put contracts.
Splunk Inc. (SPLK) is a cloud computing stock that has fallen out of favor. The company is not profitable and shares are trading near 7 times expected sales (an extremely high valuation).
This leaves the stock vulnerable to a sharp selloff in an environment where investors are moving out of unprofitable growth stocks.
Buying March $130 put contracts gives us 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.