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Today we are applying a Bear Put on SEEK Limited (SEK).

Analysis:

SEK is trading at $23.13

SEK has retested key resistance and rebounded off it recently. Today shows it breaking the short term uptrend line with bearish entry signals. There is plenty of room to the next support level.

Fundamentally SEK looks expensive in the short term. In their last AGM (Nov 19) SEK mentioned that “if macro-economic conditions deteriorate this may impact Seeks ability to achieve its guidance”.

SEK is due to report soon and it’s fair to say with how it looks both technically and fundamentally, in the short term it’s due for a pull back.

We can either trade this purely directionally, buying a Put, or instead we can do a Bear Put spread where we profit from both a fall and time decay in case it travels sidewards into its report next week. Either is fine, but the Bear Put sacrifices some profit in order to hedge against sidewards movement.