Buying SHOP put contracts.

Shopify Inc. (SHOP) is a speculative e-commerce stock trading at a premium multiple.

The company is only expected to earn $2.52 per share NEXT year, and shares are trading near $360. This means investors are willing to pay more than 140 times expected earnings — a very high price in today’s rising interest rate environment.

The stock has been in a downtrend since rates started moving higher late last year. And while many speculative stocks enjoyed a bear market rebound over the past few weeks, SHOP barely budged.

This underperformance will likely lead to further selling.

We’ll buy put contracts to set up a bearish position today. This position will help us balance our overall exposure, and should pay off if the market starts to roll over.

• Buy (to open) 2 SHOP July 15th $400 Puts
• Limit $65 or less
• The new position will represent roughly 11.6% of our Spec Model capital
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• 13:05 Executed
• Bot 2 SHOP July 15th $400 Puts @ $62.78