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.

• Buy (to open) 7 SPLK March 18th $130 Puts
• Limit $17.85 or less
• The new position will represent roughly 8.9% of our Spec Model capital
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• 11:26 Executed
• Bot 7 SPLK March 18th $130 Puts @ $17.50