Zillow(Z) Elliot Wave Completion and Short Put
Zillow took a massive dump over the last few weeks falling over 45% at its most and is currently still down 40% from its highs. It also completed all 5 legs of its downwards Elliot wave and is looking to reverse. Due to the increased volatility, its options premiums are pretty high right now too leading to our 2 main trade ideas.
1. Accumulate Shares around $125 for at least 140 and 155.
2. Naked Puts (56 Days out expiring 5/21): Short the 80 put for $1.10 which has a 89.5% POP and requires $800 BPE for a decent 13% ROC. For a more aggressive and bullish play, short the 90 put for $2.20 which has a 82.5% POP and requires $900 BPE for a better 24% ROC.
With the 200 SMA support and also considering the 2SD move that Zillow has had over the last few weeks, it is highly unlikely (90% prob.) that Zillow will break below $80 within the next 56 days. If it does, it should be a great place to accumulate given the current stable fundamentals as it will be down over 60% from the highs.
1. Accumulate Shares around $125 for at least 140 and 155.
2. Naked Puts (56 Days out expiring 5/21): Short the 80 put for $1.10 which has a 89.5% POP and requires $800 BPE for a decent 13% ROC. For a more aggressive and bullish play, short the 90 put for $2.20 which has a 82.5% POP and requires $900 BPE for a better 24% ROC.
With the 200 SMA support and also considering the 2SD move that Zillow has had over the last few weeks, it is highly unlikely (90% prob.) that Zillow will break below $80 within the next 56 days. If it does, it should be a great place to accumulate given the current stable fundamentals as it will be down over 60% from the highs.
Note
1. 140 Reached.2. The 80 strike CSP is trading for $0.35 resulting in a $0.75 or 68% profit per contract. The 90 strike CSP is trading for $0.75 resulting in a $1.45 or 66% profit per contract.
Trade active
Close CSP for $0.6 resulting in a $0.5 profit per contract
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.