Each week, I’ll give an overview of a stock and Licia Leslie will follow that up with a chart analysis the next day. Bill Griffo will chime in with macro analysis and Andrew Giovinazzi will then finish out the week with a volatility breakdown.

Have a stock YOU want us to review? Email my team here. – Mark

Hey Traders,

Zoom Video Communications’ (Ticker: ZM) slogan, “we deliver happiness”, has served it well, and with a ZM bullish option strategy on any dip, I believe will deliver the same for you …

As always, trading is about location, location, location. I think we could see a pullback in ZM over the next week or so, and then it’s time to jump in.

There are good underlying buyers of ZM stock, but we’re up against resistance, so patience is key here.

Today, I’ll share the fundamental, technical, and option positioning analysis that will give you a high probability low risk/high reward trade.

MorningStar awards ZM with a $95 fair value price. Look at the history of this valuation:

In today’s bullish market environment, in order to extend the current rally, the market is in need of investment broadening out into value stocks.

ZM is well positioned for this and has rallied 13% since early May. It’s sitting right at its highest net positive gamma strike (call wall), currently at $70.

It has struggled at this level, and with 45% of this positive gamma (meaning heavy call open interest) expiring today, it’s due for a correction next week. 

You should get an opportunity to buy near $65, and that’s a good level to purchase a bullish call spread:

Consider something like a 68/70 spread with the stock near $65 with a stop loss set on a close below $62.5 a good reward vs risk play. 

We always want to be looking for opportunities similar to ZM – an undervalued stock that has upsloping 200-day and 50-day moving averages. 

If we get the opportunity over the next week to buy a dip … take it! 

Live And Trade With Passion My Friends,

Bill Griffo