Buying LRCX put contracts.
Lam Research (LRCX) is a semiconductor equipment company. The stock broke down sharply after peaking in January and has since rallied closer to a key resistance level.
With a premium multiple to the group and overhead resistance, there’s some potential for the overall bearish pattern to continue.
Buying May $570 put contracts gives us the benefit of close to a $1 for $1 option price movement if shares drop, while muting potential risk through added time value if the shares rise. Also, this bearish position helps to offset some of the bullish exposure we currently hold in the model, giving us a more balanced approach.