SFIX gap down following disappointing earnings and not-so-bright forecast for the next quarter. Same thing happened with INTC twice over the last year and we saw how it was just an over-reactionary sell-off as it quickly rallied up after a continuation sell-off for a week or so. SFIX's fundamentals are solid assuming that shipping problems don't disrupt the business too much. It will most likely close the gap at around 42. It might also pull down a little bit more, but hopefully it won't go below $34. It gives us a decent range from $34-$42 to accumulate the stock. There is also heavy support around the $41.5 area with both a supply/demand zone along with the 200-day SMA.
Trade Ideas:
In either case, assuming you have at least 1 lot of shares, you can always sell 70%-80% OTM covered calls for more passive income while your stock appreciates.
Trade Ideas:
- Shares: Accumulate between $34-$42. SL below that if it does continue to fall further, which is unlikely but make sure the SL isn't too close to the bottom support. We should see a push up to $53.75, $65 and $72.5+.
- Short Put: Medium Risk: 35 Strike for $0.85-$1 Cr. Aggressive: 40 Strike for $1.65 Cr. This can help you reduce your cost basis by at least $0.85 to $1.65 per share if you do get assigned. If you don't get assigned or the stock never dips that low, you get to keep the premium. It also only requires $385/$425 Buying Power which should yield a nice 22%/38% max ROC.
In either case, assuming you have at least 1 lot of shares, you can always sell 70%-80% OTM covered calls for more passive income while your stock appreciates.
Trade closed: target reached:
Close Short Puts. The 35-strike SP is trading for $0.29 resulting in at least a 65% or $0.56 per contract profit. The 40-strike SP is trading for $0.48 for a 71% or $1.17 per contract Profit.
SFIX didn't hit our accumulation target area to buy shares, but the Short Puts did very well.
SFIX didn't hit our accumulation target area to buy shares, but the Short Puts did very well.