Buying U put contracts.
Unity Software (U) offers a platform that designers use to create real-time 3D content. This content can be used for gaming and other uses on mobile phones, tablets, PCs and even VR headsets.
While the technology is certainly advanced, Unity has not earned historical profits, is not expected to earn a profit this year, and will only generate about 4 cents per share in 2023.
Meanwhile, the stock is trading with a market valuation near $28 billion. That’s expensive for such a niche unprofitable technology company. And after a short-term rally following the stock’s March low, Unity appears ready to trade lower once again.
Today, we’ll buy put contracts to bet on a decline for this stock, and a possible re-test of the lows near $73. This sets up a good reward-to-risk opportunity as these put contracts will certainly retain plenty of value even if Unity holds up (because of the volatility in this market right now).
- Buy (to open) 4 U May 20th $110 Puts
- Limit $19.50 or less
- The new position will represent roughly 7.6% of our Spec Model capital
- 10:11 Executed
- Bot 4 U May 20th $110 Puts @ $16.72