Bearish trade on Zillow

So far in 2019 Zillow (Z) has increased almost 35% outpacing the S&P and major US indexes, but the stock is showing signs of hitting a wall on the upside. It peaked last summer at $65.70 and hit a low of $26.38 just 6 months ago, and currently trades around $41.60. However, the stock has seen sharp pull backs from recent highs and we're seeing it stall around the current level it's at right now. Any signs of weakness in their portfolio of home purchases that are assets on their balance sheet will drag this stock through the mud. Risks from slowing home sales, rising interest rates or a slowdown in the economy will punish this company which stepped outside of its technology focus into flipping homes.

Buy the August 2019 $40 Puts on Z for $3.10, and you'll be rewarded on any pull back on this stock. You could offset the purchase price by selling lower strike Puts, but we're not doing that.