Buying ROKU put contracts.
ROKU Inc. (ROKU) still trades with a $17 billion market cap despite the fact that the company is losing money in an incredibly competitive industry.
Shares rebounded from the March lows as beaten down tech stocks mustered a relief rally. But this name in particular is still very vulnerable to sharp declines. The stock has run into resistance near the 50-day moving average and now appears to be rolling over.
Today, we’ll buy put contracts to bet on a decline for this stock, and a possible re-test of the lows near $98. This sets up a good reward-to-risk opportunity as these put contracts will certainly retain plenty of value even if ROKU holds up (because of the volatility in this market right now).