Jack Dorsey's Block Could Be Headed Lower; How To Profit Without Getting Short | IBD | Summary and Q&A

TL;DR

Payment stock Block Inc (formerly known as Square) is experiencing a downward trend, and traders can consider a bear call spread strategy to potentially profit from the stock's decline.

Key Insights

• 📉 The stock of payment software provider Block Inc has fallen below support, indicating a potential downward trend.
• 🧔 Traders can consider a bear call spread strategy to potentially profit from the stock's decline.
• 🤑 The bear call spread involves selling an out-of-the-money call and buying a further out-of-the-money call.
• 😚 The maximum profit for the bear call spread strategy occurs if the stock closes below $80 on March 17th.
• 🤑 Traders should practice with virtual accounts before risking real money in options trading.
• 😚 Options trading is complex, and investors can lose 100% or more of their investment in some cases.
• 😀 The new options Trader app from IBD provides options education and trade ideas.

Transcript

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Questions & Answers

Q: What is the current trend for payment stock Block Inc?

The stock has slipped below support and is possibly gathering support at the 50-day line, suggesting a potential downward trend.

Q: How far has the stock pulled back from its February 2nd highs?

The stock has pulled back over 19% from its February 2nd highs, indicating a significant decline.

Q: What is a bear call spread strategy?

A bear call spread involves selling an out-of-the-money call and buying a further out-of-the-money call. It can be profitable if the stock trades lower, sideways, or even slightly higher, as long as it stays below the short call at expiration.

Q: What is the risk and potential gain of the bear call spread strategy for Block Inc?

Traders selling the spread would receive a maximum possible gain of $110. The maximum loss would be $390 if the stock closes above $85 on March 17th.

Summary & Key Takeaways

• Shares of payment software provider Block Inc have fallen below support, indicating a possible downward movement.

• Traders who believe the stock will not hold above the 50-day line can consider a bear call spread strategy.

• The bear call spread involves selling an out-of-the-money call and buying a further out-of-the-money call, allowing for potential profit if the stock trades lower or sideways.