This is a post-earnings followthrough trade in CREE.
After getting slammed on earnings, the stock has been in a consolidation range for about 2 weeks. This is a classic bear flag pattern, with targets in the 50s.
Straight up put buys would work here, but you could also consider a bear put spread. The reason this strategy looks attractive is that you have skew in your favor.
Here’s the trade I like:
Buy Oct 55 Put
Sell Oct 50 Put
Debit: 1.55
A move above 58.50 invalidates the flag pattern– that would put your risk at -35 per spread.
Initial target is the rising 200 day moving average, currently around 51.25.