Bubble? What bubble?
SPCE has round-tripped its most recent parabolic rally. Momentum traders who are still holding out are puking, and anyone who bought the dip early are taking some serious heat. I want to fade this move, anticipating that the downside risk is a little bit overpriced.
Nothing has changed with respect to the stock. Earnings... well, they lost money but everyone new that. This is more just a proxy-momentum-breakdown that is occuring with many other names as well.
Here's the trade setup I like:
Very simple premise here. Currently the stock is crashing and coming back to the topside of its earnings trading range. I'm very OK with owning SPCE at a basis of 17.80.
Here's what it looks like on the chart:
Always the possibility I'm early, so look to add on the name if it trades into the 22s.
If you want to manage your margin a little better, you can buy the 15 put and convert it to a bull put spread.