[Options] The Bears Are Blocking the Square

Sean McLaughlin
June 17, 2024

In today's episode of the Flow Show, Steve and I navigate some trade ideas that would help add bearish portfolio diversification in case the stock market wants to catch its breath this summer.

We discussed two specifically ugly charts, and we both agreed that Block Inc $SQ offers the best opportunity as an options trade.

Watch the video above for all the color you need.

Here's the chart for $SQ:

Here's the Play:

I like buying $SQ September 55 puts for less than $3.00 per contract. This premium I paid today is the most I can lose in this trade if we're dead wrong.

My bearish tilt is still valid as long as $SQ can stay below $68 per share. But any close above $68 is my signal to exit the position. Additionally, I'll cut my losses if these puts lose 50% of their value.

For profit harvesting, I'm looking to sell half of my position if/when $SQ trades down to $50 per share -- a level that is likely to offer some (hopefully temporary) support. And if we break that level, then I'll look to capture my additional gains by closing what's remaining of my puts if/when $SQ trades to or through $40 per share. I don't want to get caught in any potentially vicious bearish bounce.

If you have any questions on this trade, please send them here.

If you missed my most recent ASO video Jam Session, you can catch a replay on Stock Market TV.

~ @OptionsSean

P.S. We do trades like this regularly. If you'd like to leverage Best-in-Class technical analysis into smarter directional options trades, try out All Star Options Risk Free! Or give us a call to learn more: 323-421-7910.

Filed Under