Schaeffer's Weekly Options Countdown subscribers scored an impressive gain with our Block Inc (NYSE:XYZ) weekly 9/5 79-strike put recommendation. In fact, investors quadrupled their money in less than a week, so it's time to dig into the drivers behind this winning trade.
At the time of our recommendation on Sunday, Aug. 31, Block (XYZ) had been stuck under $80 for over a month, with three rejections resulting in lows around $73. It seemed like that could roll over, though, as fintech peers stalled out.
What's more, there was peak call open (OI) interest at $80, so as prices moved lower, call hedges could make a move back to the $73-$74 area or below. Plus, a pivot high had just tested and faced rejection at that area, with shares closing below the Jan. 13 pivot low at $80.50, which acted as key resistance.
The stock went on to string five consecutive losses before yesterday's bounce, slipping back below the 20-day moving average after a short stint above it. XYZ was last seen down 0.3% to trade at $75.55, but Schaeffer's subscribers already collected a +300% profit after they closed their positions on Thursday, Sept. 4.
