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

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February 22, 2023
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Investor's Business Daily
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Jack Dorsey's Block Could Be Headed Lower; How To Profit Without Getting Short | IBD

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.

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Key Insights

  • πŸ“‰ The stock of payment software provider Block Inc has fallen below support, indicating a potential downward trend.
  • πŸ§” Traders can consider a bear call spread strategy to potentially profit from the stock's decline.
  • πŸ€‘ 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.
  • πŸ€‘ 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.
  • πŸ˜€ The new options Trader app from IBD provides options education and trade ideas.

Transcript

foreign hey Traders for today's trade we're looking at a bear call spread in payment stock block Inc formerly known as Square so taking a look at the stock on Market Smith shares of the point of sale payment software provider have slipped below support at their 21 day line the stock is possibly Gathering support at the 50-day line here but it may a... Read More

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.

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