Zillow (NASDAQ:Z) stock had been lucky so far this year, up 36% year-to-date as of yesterday’s close. But last night management reported earnings and Wall Street hated what they saw.

Investors sold the stock in droves. A one-day 20% dip is rarely a one-off event, so there could be more downside in the short term. But therein lies the opportunity for the long term.

So far I have not been a fan of Z stock, but I am interested in profiting from what others fear on today’s headline.

For the quarter, management delivered a beat on earnings but they missed the revenue targets. That alone is not the problem. More importantly, they disappointed on forward guidance, and lately that matters much more to Wall Street.

To add to the confusion, Zillow also announced that they bought a mortgage company for an undisclosed amount. This is just too much uncertainty in a short period of time for investors.

All of this comes close on the heels of their recent announcement that they are also buying property. Clearly the once simple concept of Zillow business is now much more complicated and less obvious. So traders are clearing out until the end game becomes clearer.

I am a fundamental trader and usually I like to sell downside risk into fears, but only where I see supportive value. In this case I don’t have any since Zillow stock still runs red.

So I consider today’s trade a speculative one inside a conservative portfolio. The setup here is merely a bet on price action rather than a bet on that Z stock management’s ability to execute on plans.

I do believe that the platform has tremendous value to the industry and that eventually someone will figure it out. But for now it’s iffy at best.

Rising rates could be a complicating factor to the real estate industry but it could actually spur more business for Zillow as professionals there will probably need to invest more into their own marketing to keep their sales metrics up.

Z Stock Trades

The Bet: Sell Z JAN 2019 $30 naked put and collect 40 cents to open. Here I have a 85% theoretical chance that I would retain maximum gains. But if price falls below my strike then I own the shares and would suffer losses below $29.60.

Selling naked puts carries big risk especially for a stock as frothy as Z stock is. For those who want to mitigate it, they can sell a spread instead.

The Alternate Bet: Sell Z JAN 2019 $35/$30 bull put spread where I have the same odds of winning. Then the spread would yield 20% on risk. Neither trade setups require a rally to win.

Click here for more of my market thesis and get an ongoing free copy of my weekly newsletters.

Nicolas Chahine is the managing director of SellSpreads.com. As of this writing, he did not hold a position in any of the aforementioned securities. You can follow him as @racernic on twitter and stocktwits.