To The Moon

CRWD: Soaring to New Heights or Just Another Cyber Mirage?

This morning, I successfully executed my first Bull Call spread on CLSK CleanSpark, as a test run for this strategy. Now I’m going to look at applying the same strategy to CRWD.

I have included detailed instructions on how I will go about this at the end of this post for anyone interested.

I like to help others and follow my mentor Zig Ziglar’s quote that says, “If you help enough people get what they want, you will get what you want.”

So fellow Tigers, gather ‘round, because I’ve got some sizzling insights on CrowdStrike Holdings (CRWD) that might just light up your trading screens. 🚀

The Headlines

CrowdStrike’s latest earnings report is the stuff of dreams. They smashed expectations with a Q1 adjusted EPS of $0.93, beating the estimated $0.89, and reported revenues of $921.04 million against the forecasted $904.82 million. The stock closed at $305.58 on the open market but shot up to $326.21 in after-hours trading, reflecting a solid 6.75% jump.

The Bull Case

1. Strong Demand: CrowdStrike is riding a wave of robust demand for its cybersecurity solutions. With the increasing threat landscape, their cloud-native platform is more relevant than ever.

2. Strategic Partnerships: Collaborations with tech giants like Amazon and Google are giving CrowdStrike a significant edge in market penetration and credibility.

3. Analyst Love: The analysts are all in. With a consensus rating of ‘Strong Buy’ and price targets averaging $369.53, there’s a lot of bullish sentiment around .

The Bear Case

1. Market Competition: Despite its strong position, CrowdStrike faces stiff competition which could impact its market share and pricing power.

2. Stock Price Consolidation: After a strong run, some analysts believe the stock needs to consolidate before it can continue its upward trajectory.

The Technicals

• Price Movement: The stock’s recent surge post-earnings is a positive indicator. If it breaks through the next resistance level around $350, we might see another leg up.

• Volume: Significant trading volumes post-earnings suggest strong investor interest and potential momentum continuation.

Winning Trade Ideas

To turn these insights into a winning trade, these strategies could be considered:

1. Buy the Dip: If CRWD pulls back to support levels around $315-$320, consider entering a position. The strong earnings and positive guidance suggest that any pullbacks might be temporary and offer a good entry point.

2. Call Options: For those looking to leverage their position, buying call options with a strike price near the current level (around $330-$340) and an expiration a few months out could capitalise on further upside .

3. Trailing Stop: If you’re already holding CRWD, set a trailing stop to lock in profits while allowing for further gains. This way, you can ride the wave upwards while protecting against sudden downturns.

4. Monitor Key Levels: Watch the $350 resistance. A breakout above this level with strong volume could signal a continuation of the upward trend, making it a prime opportunity to increase your position.

Final Thoughts

CrowdStrike’s combination of robust financial performance, strategic partnerships, and strong market demand positions it as a promising play. However, keep an 👁️ on the competitive landscape and be prepared for potential consolidation phases.

So, what do you think, fellow Tigers? Is CRWD the real deal, or just another tech hype? Let’s dive into the charts and trade ideas in the comments!

How I’ll trade a Bull Call Spread on CRWD. Here’s a detailed guide on how to place this Bull Call spread:

1. Select the Stock and Time Frame: Choose CrowdStrike Holdings (CRWD) and decide on an expiration date a few months out. For instance, you might select options expiring in September 2024.

2. Determine the Strike Prices: Identify two strike prices – one lower strike price where you expect the stock to move beyond (Buy Call) and one higher strike price where you cap your potential profit (Sell Call). For example, buy a Call option at a $330 strike price and sell a Call option at a $350 strike price.

3. Place the Buy Call Option:

• Search for CRWD options.

• Select the expiration date (e.g., September 2024).

• Choose the Call option with the $330 strike price.

• Enter the number of contracts you wish to purchase and place the buy order.

4. Place the Sell Call Option:

• In the same options chain, find the Call option with the $350 strike price.

• Enter the same number of contracts you purchased in the buy call option.

• Place the sell order for this Call option.

5. Confirm the Spread:

🚨• Ensure both legs of the spread are executed simultaneously.

• Review the net debit (cost) of the spread. This is the difference between the premiums of the bought and sold options.

6. Monitor the Trade:

• Keep an 👁️ on CRWD’s stock price. The goal is for the stock to close above the lower strike price ($330) but not necessarily exceed the upper strike price ($350) by expiration.

• If CRWD’s price rises significantly and you wish to lock in profits early, you can close both legs of the spread before expiration.

This is what I did with my CLSK trade this morning as I was not able to keep an 👁️ on it at work.

I use Yahoo Finance to set price alerts. I use Trading view to look at indicators and make charts with the indicators I have faith in.

Example:

• Buy 1 CRWD Sep 2024 330 Call at $15.00

• Sell 1 CRWD Sep 2024 350 Call at $10.00

• Net Debit: $5.00 (15.00 - 10.00) per share, total cost $500 (since each option contract represents 100 shares).

By executing this strategy, you limit your maximum risk to the net debit paid, while your maximum profit is capped at the difference between the strike prices minus the net debit, providing a balanced approach to leverage potential upward movements in CRWD.

This strategy worked well for me with CLSK, and I’m confident it will perform similarly with CRWD given its bullish outlook. Happy trading!