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
~~~~~~ - 13:05 Executed
- Bot 2 SHOP July 15th $400 Puts @ $62.78