dime

OPENING: XLK AUG/SEP 72/76 BEAR PUT DIAGONAL

AMEX:XLK   SELECT SECTOR SPDR TRUST TECHNOLOGY SELECT SECTOR USD DIS
BOT +1 DIAGONAL XLK 100 21 SEP 18/17 AUG 18 76/72 PUT @2.75

Paid 2.75 (debt is 69% of the width )
Breakeven @ expiry $73.58
-39 delta, .96 theta

Max Loss : $275
Max Profit : $126


Notes:
Opened a bearish trade here fade the recent rally and add some negative deltas to balance the portfolio.

Following another great trade idea from NaughtyPines! (link below)

Rationale:
Any number of reasons a summer 'tech-wreck' could evolve: trade war, AAPL cutting mobile parts orders from suppliers, weakening Chinese economy etc ...

The top holdings are; AAPL , MSFT , FB , GOOG , V, INTC , T, VZ , CSCO (not sure how V is a 'tech' name?)

Some fundamentals on XLK : The forward PE is near 19, and P/B ratio over 5. There's almost no yield, so it's all about the estimated earnings growth , which if revised down should get punished.

Based on a _DCF valuation model: XLK fair value around 75 by year end... based on 2019 earnings estimates and assuming 13.6% earnings growth .

For the same deltas you could short 40 shares of XLK and borrow $2850 worth of stock, but would be charged the overnight borrowing rates as well.
Trade closed: target reached: Closed for win today as FANGs continue to slide....

Paid 2.75 initial debt. 25% profit target was 3.43

SOLD -1 DIAGONAL XLK 100 21 SEP 18/17 AUG 18 76/72 PUT @3.50
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