Subject: Follow the CRWD

Dear Friend,

Today we bring you a brand new Trade of the Week! Each week we share a new trade idea directly from our trading team.

Terry

September 7, 2021

Week 663

Follow the CRWD

CrowdStrike Holdings (CRWD) reported earnings on Tuesday that beat estimates on the top and bottom lines. The cloud infrastructure company also raised its full-year sales and earnings guidance for FY 2022. The news was met with several price target increases that reached as high as $340 (the stock closed at $278 on Friday). In contrast, traders may have expected more from CRWD’s revenue guidance, as the stock dipped 4% the next day. But the shares finished the week on a positive note, erasing all but 1% of the initial loss.

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CRWD has been a steady performer in 2021, gaining more than 30%. It hasn’t been a smooth ride, though (the stock was down 20% at the end of March). The 50-day moving average has provided some support, though it has been violated. Currently, this trendline sits at 258, which is just below the short strike of our put credit spread. However, the 50-day should cross above 260 next week.

If you agree that CRWD ~~DIS~~ will continue its extended rally and stay above the ~~stay above its~~ 500-day moving average (blue line in chart), consider the following trade that relies on the stock remaining above 260 (red line in chart)~~175~~ through expiration in six~~five~~ weeks.

Buy to Open CRWD~~DIS~~ 15Oct~~7Sep~~ 250~~170~~ put (CRWD~~DIS~~211015~~0917~~P250~~170~~)
Sell to Open CRWD 15Oct 260 put (CRWD211015P260~~DIS 17Sep 175 put (DIS210917P175~~) for a credit of $2.65~~1.05~~ (selling a vertical)

This credit is $0.024 less than the mid-point of the option spread when CRWD~~DIS~~ was trading at $278~~181~~. Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will be only $1.30 per spread. Each spread would then yield $263~~103~~.70. This trade reduces your buying power by $1,0500 and makes your net investment $736~~396~~.30 ($10500 – $263~~103~~.70). If CRWD~~DIS~~ closes above $260~~175~~ on Octob~~Septemb~~er 175, both options will expire worthless and your return on the spread would be 3626% ($~~103~~263.70 / $736~~396~~.30).

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

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Subject: Follow the CRWD

Follow the CRWD