6/13/24 :: VROCKSTAR :: 
ZM
As written about just 3 weeks ago when they reported EPS, the setup was non-obvious and i remained on the sidelines. we've chopped all over the place but the factor gawds finally got the best ofZM and basically everything else that's software in the last week and especially the last two sessions.
I HAVE NO IDEA BUT I THINK A FUND IS BLOWING UP AND BEING FORCED TO UNWIND A BOOK THAT INCLUDES A LOT OF SOFTWARE AND THERE ARE NO BIDS
this is conjecture. but i've been around. i sniffed this out on
AAPL vs. 
NVDA without knowing exactly what was going on into friday's close.
right now we're in value territory for $zm. remember nearly 40% of this co's value is CASH. i honestly wish they'd stop being stupid and use it to buy stock or just give it back (good riddance). sitting on cash is a low IQ move in this environment for co's. i digress... but it's part of the example of why zoom mgmt sucks among many other factors.
with that caveat out of the way (the point being... we're playing reversion, not world-beater, turn around or anything more interesting), the valuation is simply "too low" all else equal esp as market looks to rip higher (i'll write more on this in a bit, maybe tmr). these dumped names with negative gamma, possible fund hunting (where industry knows who is blowing up and further attacking their portfolio to the short side) as well as the AI-factor... means there's a higher probability 60/40? 70/30? that we resolve higher short term.
i'm swinging longZM here at $58 with exit at $60. or i'll sell some calls if/as we get there. but i don't want to get cute. this is a shorter term trade for me. i like the margin of safety on the cash balance, buyback, the EPS adj. for cash is ~7x at this pt - honestly too low. take out territory etc. any narrative works more than "it's going lower" - b/c it can - but why.
be safe out there, but there's a lot of software now selling at deep discount. not all of it. much of it is going lower. but know where to pick spots to take stabs as we remain tape risk on.
V
ZMAs written about just 3 weeks ago when they reported EPS, the setup was non-obvious and i remained on the sidelines. we've chopped all over the place but the factor gawds finally got the best of
ZM and basically everything else that's software in the last week and especially the last two sessions. I HAVE NO IDEA BUT I THINK A FUND IS BLOWING UP AND BEING FORCED TO UNWIND A BOOK THAT INCLUDES A LOT OF SOFTWARE AND THERE ARE NO BIDS
this is conjecture. but i've been around. i sniffed this out on
AAPL vs. NVDA without knowing exactly what was going on into friday's close.right now we're in value territory for $zm. remember nearly 40% of this co's value is CASH. i honestly wish they'd stop being stupid and use it to buy stock or just give it back (good riddance). sitting on cash is a low IQ move in this environment for co's. i digress... but it's part of the example of why zoom mgmt sucks among many other factors.
with that caveat out of the way (the point being... we're playing reversion, not world-beater, turn around or anything more interesting), the valuation is simply "too low" all else equal esp as market looks to rip higher (i'll write more on this in a bit, maybe tmr). these dumped names with negative gamma, possible fund hunting (where industry knows who is blowing up and further attacking their portfolio to the short side) as well as the AI-factor... means there's a higher probability 60/40? 70/30? that we resolve higher short term.
i'm swinging long
ZM here at $58 with exit at $60. or i'll sell some calls if/as we get there. but i don't want to get cute. this is a shorter term trade for me. i like the margin of safety on the cash balance, buyback, the EPS adj. for cash is ~7x at this pt - honestly too low. take out territory etc. any narrative works more than "it's going lower" - b/c it can - but why.be safe out there, but there's a lot of software now selling at deep discount. not all of it. much of it is going lower. but know where to pick spots to take stabs as we remain tape risk on.
V
Note
you guys know i don't "trade" in the traditional TA-style-way.so this one is akin to noticing similar rotation into $appl from
NVDA two weeks ago that friday afternoon. the software factor is getting a broader "take profits" from semis today. opex is tmr. if this rally continues (for software) into the close, there's going to be a real improvement on basically every one of the option's valuation (zee greeks). typically you'd want to chase the runners (cyber) higher. not bad move (maybe something like
NET that has great product, good results, expensive, but still relatively underforming its peers today and has a good chance of catch up if this above thesis is correct)but i'd posit
ZM might be the best risk reward play given the outsized down move (post EPS - hence the post i made into the results - go search that). as well as the swing (still swinging lol) entry at $58.i bot some 7/5 $58C's for just a touch under 80c to play this continuation and not neck out on my notional position further. to put it into perspective guys (an insight into how i size) this play is a 5 bps position for me. i think R/R is probably a 3-4:1 but only a 30% probability play. if works tmr and i get paid on 2:1 - i take the initial ticket off the table and play risk free into early next week on the rest.
just a thought. you won't see a ton of this stuff from me, but worth sharing in case ppl have other plays on the above thesis (e.g. $NYSE:PLTR which i don't own stands a good chance of ripping higher ... cyber, outperforming today... strong community buying c's dragging gamma squeezy).
dat's all 4 now. gl fam.
V
Note
taking profits here on the 2/3 of the calls i bot here 10 mins after the open. almost +80% and need to pay for the sins of my $NASDAQ:ACCD trade gone wrong. rolling the 1/3.
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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.