ROKU is oversold and down 25% from the highs. While it is definitely overvalued both in its sector and tech in general, considering the growth prospect, it seems justified.
It has found support on the 322 level. There is overhead resistance and the 61.8% fib line at $380. If it reverses there and continues to fall further, we have the 127% fib level at $277 followed support around $250 and lastly the 200 SMA at $242.
Trade Idea:
Short the 225 Put expiring 4/16 for at least $1.15 Credit. It has a very high 95% PoP but a relatively high BPE of $2250. In order for the Put to expire ITM, ROKU needs to tank 33% from the current level or over 52% from the ATH. This should not only allow you to buy into ROKU at a discount if you get assigned, but a 2 SD (95%) move is often accompanied by at least a small short term reversal as people buy the dip and average down. Regardless, this is a solid plan that offers you a 95% chance of keeping the $115 you collect in premium, and a 5% probability that you are assigned ROKU shares at a 50% discount from its highs.
It has found support on the 322 level. There is overhead resistance and the 61.8% fib line at $380. If it reverses there and continues to fall further, we have the 127% fib level at $277 followed support around $250 and lastly the 200 SMA at $242.
Trade Idea:
Short the 225 Put expiring 4/16 for at least $1.15 Credit. It has a very high 95% PoP but a relatively high BPE of $2250. In order for the Put to expire ITM, ROKU needs to tank 33% from the current level or over 52% from the ATH. This should not only allow you to buy into ROKU at a discount if you get assigned, but a 2 SD (95%) move is often accompanied by at least a small short term reversal as people buy the dip and average down. Regardless, this is a solid plan that offers you a 95% chance of keeping the $115 you collect in premium, and a 5% probability that you are assigned ROKU shares at a 50% discount from its highs.
Trade closed: target reached:
Close the 225-strike CSP. It is trading for $0.15 resulting in a $1 or 87% profit.
It does have a 99% probability of expiring OTM and worthless, but because it is only worth 0.15, it isn't worth holding.
It does have a 99% probability of expiring OTM and worthless, but because it is only worth 0.15, it isn't worth holding.