ROKU Stock: Bearish Calendar Spread Option Trade

[Option Beast]( 03/20/2021   |   [View in browser]( --------------------------------------------------------------- [ROKU Stock: Bearish Calendar Spread Option Trade]( The tech sector continues to remain weak and after yesterday's action, I'm rethinking my bullish stance on Square (SQ) stock. I'll also discuss a ROKU stock bearish calendar spread. One trade I like to use on stocks that might suffer large drops is a bearish calendar spread. These trade are negative delta and positive vega (these are option "Greek" measurements), so can do quite well when the stock drops. A calendar spread is a trade that involves selling a short-term option and buying a longer-term option with the same strike price. Traders typically use call options unless the trade has a bearish bias in which case they would use puts. Let's take a look at an example of a bearish calendar spread on Roku (ROKU) stock. [More...]( SPONSORED CONTENT [Legendary "Tarheel Trader" Reveals $5,000 Income Trick]( A legendary Tarheel trader claims she can show anyone how to pull down $5,000, $10,000 even as much as $20,000 a month in income thanks to her "backwoods" trading technique. She's giving away this method for free until Sunday. [Instant access here...]( [REFLECTIONS... One Year Later by David Sager](#) Everything we heard about Covid-19 was true. The novel coronavirus has killed millions of people around the globe, and left others seriously impaired, and has made 'hugging' a loved one potentially deadly. Yet everything we heard about Covid-19 was...wrong at least in relation to the economy and financial markets. Exactly one year ago, the virus began to spread across the US, the economy effectively shut down, leaving 20 million workers unemployed, and sending the stock market nosediving. However quick and decisive action by the Federal Reserve and the US government, and the rapid development of a multitude of vaccines by many pharmaceutical companies not only helped to combat a second catastrophe, but also led to one of the swiftest economic recoveries on record, and stock market highs. (never before in our history has such a unified effort taken place, and been successful). Now with the lifting of Covid-19 restrictions in sight, America itself is on the cusp of a new beginning, in rebuilding all aspects of the economy. The combination of trillions of dollars of fiscal stimulus, ultralow interest rates and a 'newfound' sense of liberation means the US economy in the coming months will be unlike any the country has ever experienced in decades. Growth will be faster, inflation will be hotter and job markets could bounce back speedily. Barron's declared on March 23, 2020 cover, the government had to step up in a big way. And it did, defying many skeptics and doomsdayers. "You don't fight the Fed when it's fighting a pandemic, " says Edward Yardeni, president of Yardeni Research. "I get the sense that the only regret that the Fed and fiscal policy makers have is that they didn't do this in 2008." Value stocks are beating growth stocks by the broadest of margins in nearly two decades, the latest sign that investors expect the next year to launch a powerful economic rebound. Interestingly, this year, The Russell 1000 Value Index is up a whopping 11% and The Russell 1000 Growth Index edged up only 0.2. That gap is the largest lead for Value stocks since 2001, according to Dow Jones Market Data when bursting of the tech bubble led to a resurgence in Value shares. Recently leading the way for the Value index are banking heavyweights JPMorganChase, and Bank of America, as well oil giants ExxonMobil, and Chevron. While both banks are up 20% for the year, the oil guys, Exxon is up 50% and Chevron is up 32% this year, strong moves that speak volumes about Value stocks. All four stocks declined in 2020. The Dow had it's best week in months rising 4% for the week. The Dow Jones Industrial Average rose for the sixth consecutive session . The blue-chip 'gauge' added 293 points or 0.9% to 32,778, finishing it's best week since November 2020. The S&P 500 edged lower for most of the session, however it gained 4 points or 0.1% to 3943, ironically a new high. The tech heavy Nasdaq Composite lost 78.81 points or 0.6% to 13,319. Rising interest rates--and what they signal about rising inflation--are the reason for volatility, however higher rates can not kill this rally. The stocks leading this rally this time are a little different than the ones that led it to records in 2020. The 'ballgame' has changed.' A Sleeping Giant No More.....India's markets are primed and show strength as Narendra Modi's government gives 'all in' in it's ambitious 2021 budget on the heels of finishing off the pandemic. The country's National Stock Exchange, NSE, is experiencing one of the most powerful rebounds from the pandemic lows amongst global markets in 2020. Shares of the NIFTY 50 index which tracks the average of the 50 largest stocks listed on the NSE-jumped 4.7% upon the unveiling of Prime Minister Modi's plan on February 1st. That index climbed more than 13% to a mid-February high, even surpassing the 15,000 level for the first time in it's 35 year history. The market rebound was extremely significant for India, as it suffered the worst domestic product decrease of all major nations, as the pandemic surged worldwide. Noteworthy also is the fact that India presently is very efficient in vaccine inoculation, thus bringing normalcy to it's population in a swift manner. Sonal Varma, managing director and chief economist of Nomura Holdings said in a presentation to investors, "This budget in a sense is a game changer in terms of the government's thinking." She added, "I think there is clearly an important shift, if we look back at 2020 as essentially being a lack of fiscal support when monetary policy had basically done the heavy lifting in supporting growth. And we are seeing a transition now with fiscal policy taking up the baton and supporting growth." A number of US-traded India stocks have also shown strength, a great recovery for a country that suffered the worst GNP decrease of all major countries as the pandemic surged. RUMBLINGS ON THE STREET Jimmy Chang, chief investment officer at Rockefeller Global Family Office, WSJ "There's pent up demand driving accelerating earnings growth, especially among these Value Stocks that were hurt last year," said Mr. Chang. "At the same time we still have more fiscal stimulus coming into the system, so that will further turbo-charge their growth." Daniel Genter, chief executive and chief investment officer at RNC Genter Capital Management, WSJ "People are starting to see, OK, we're going to open up," said Mr. Genter. "There's a light at the end of the tunnel, and it's not a train coming the other way." President Joe Biden on widening Covid vaccination eligibility, Barron's "July Fourth with your loved ones is the goal." Warren Buffett, speaking about the use of options strategy, Barron's "Time Arbitrage," a strategy that entails selling short-term options to buy blue-chip equities that can be held for many years. The options premium is intended to supplement the compounding of dividends and stock returns over time. As Buffett noted in his shareholder letter about buying back stocks, quoting Mae West: "Too much of a good thing can be...wonderful." Greg Stanek, a portfolio manager at Gilman Hill Asset Management, Barron's Mr. Stanek points out that since tech "dividends are very low relative to earnings, there is a lot of growth potential, but it will take many years for the dividends to be attractive to a yield-focused investor." The good news, he adds, is that "there is likely very little risk of the large tech companies cutting their dividends anytime soon." due to strong free cash flow, healthy balance sheets, and defensive earnings. [Got $3,000? Buy These 3 Top Cloud Computing Stocks Right Now]( The digital transformation in the business world was already well underway when 2020 began, but the emergence of the COVID-19 pandemic led to a notable spike in the rate at which organizations adopted cloud computing. Amazon (NASDAQ: AMZN) was a pioneer in this tech realm, and its Amazon Web Services (AWS) is still winning the largest slice of the business in it with about a third of the cloud infrastructure market. But investors who focus narrowly on the market leader risk missing out on an ever-growing list of opportunities in this fast-growing sector. The advent of the cloud has created a host of new opportunities, and the companies that are taking the best advantage of them can provide excellent long-term gains for savvy investors. Let's consider a few of cloud computing's biggest business segments, and the companies that are the clear winners in each area. [Article continues...]( [Get Rich As A Renter: 5 Ways To Build Wealth Without Buying A House]( People are drawn to buying a home for all kinds of reasons: more space, a backyard for the dog, the investment opportunities or simply because they want to. And it may be great for them, but you don't have to beat yourself with someone else's yardstick. If you're not in the position to be able to (or even want to) buy a home, you may have heard that renting is as bad as burning your money. But it's not a fair comparison. Here's how being a renter can work to your financial benefit. [Click to continue reading this article...]( [A Tax Break For Retirees Is Back. Here's How To Use It - And What To Avoid.]( Welcome to the height of tax prep season, with millions of people pressing to get their 2020 returns finished and filed. But rather than talk about your 2020 taxes, let's talk about a tax break for some of us that disappeared last year but is back in full force this year. This break is a fringe benefit of getting old. It lets some of us (including me) in their 70s and up use a tax strategy that got canceled for 2020 because of covid but is now back with us. I'm talking about Qualified Charitable Distributions, which allow Individual Retirement Account holders to divert some of their federally taxable required distributions to charity. That lets the IRA holders make donations and reduce their federally taxable income - while still letting them take the standard deduction on their federal tax returns. 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