Turn ROKU Into A High-Probability Cash Machine

15 Eyl 2023

Hey guys! Today, we're looking at a Trade Idea in ROKU, the volatile smart TV platform company.

Like most of our trade ideas, this post focuses on selling put options - this time, on ROKU shares.

In case you're unfamiliar with options -> when you sell a put option, one of two things happens.

Either;

A.) The stock price finishes above the strike price of the put when the put expires, in which case you make money.

B.) The stock price finishes below the strike price of the put when the put expires, in which case you’re forced to buy the stock at the strike price.

With the trades we publish, if the stock goes up, sideways, or down a bit, you'll make money. If the stock goes down a lot, then you'll be forced to buy shares.

In other words - either make money, or buy the dip!

The trick is finding the right stock at the right time.

Right now, ROKU seems like a great candidate for this strategy.

First off, the company's shares seem to have found a solid base recently:



On top of that, financials seem to be improving. Revenue continues to climb higher, and free cash flow (while negative), seems to have bottomed, and is finally headed in the right direction:



Most importantly, the company has stopped diluting shareholders meaningfully, which should lead to cleaner value accrual when the company becomes profitable again (which it has plans of doing):



Lastly, the company has continued to stack green bars, which is indicative that the long term trend is back to the upside:



Given that the 10/27, 68 strike put options have an 80% chance of making a profit by expiry, it's a trade we're strongly considering. Especially if the alternative result is owning shares in this company under $70.

What do you think of this idea? Let us know in the comments below.


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