To receive further updates on this OKTA Inc. (NASDAQ:OKTA) trade as well as an alert when it’s time to take profits, sign up for a risk-free trial of Power Options Weekly today.
Editor’s Note: U.S. markets will close early today at 1 p.m. ET.
I am recommending a bearish trade on OKTA Inc. (NASDAQ:OKTA), a technology company that provides identity management solutions to businesses, universities and other agencies in the United States and internationally.
The broader market has retested the lows it made earlier in October. So far, the S&P 500 has held above the 2,600 level. But if it gets much lower than it is at current levels, then I’ll start to become increasingly concerned about a more extended drawdown.
Daily Chart of S&P 500 — Chart Source: TradingView
We are now in a “rolling bear market.” What I mean by that is, rather than every sector of the market moving lower all at once, we have seen select sectors get hit one after another.
Small-cap stocks were one of the first areas to decline, along with the homebuilders, then the retailers, then the oil stocks and, most recently, tech stocks took a beating.
In particular, the FANG stocks — Facebook (FB), Amazon (AMZN), Netflix (NFLX) and Alphabet (GOOG) — have been at the center of the selling in the past few weeks.
I had also mentioned previously that the FANGs were a few of the only stocks still holding up the market, so when they started to break down, they took the major indices with them.
Daily Chart of Okta, Inc. (OKTA) — Chart Source: TradingView
OKTA bounced at the end of Wednesday’s session, but because of the trend in the rest of the tech sector, and with overhead resistance coming into view at the $53 level, I don’t think this was anything more than a dead-cat bounce.
With that in mind, I’m expecting shares to turn lower and head back towards the $40 level in the coming days.
Buy to open the Okta, Inc. (OKTA) Jan (2019) 40 Puts (OKTA190118P00040000) at $1.85 or lower.
Follow our Facebook page to receive each Trade of the Day direct to your News Feed — and join the conversation.
InvestorPlace advisor Ken Trester brings you Power Options Weekly, which delivers 5 new options trades and his latest trading advice to you each Friday. Trester has been trading options since the first exchanges opened in 1973 with a winning streak that goes back to 1984 with money-doubling average annual profits since 1990.
