Buy Alert: May 3, 2013

Marcus Haber | May 3, 2013

Buy Alert: May 3, 2013

Trade Details

Buy LinkedIn (LNKD) June 2013 $150 Puts for $1.30 or better

Why?

I actually like LinkedIn and overall I think it’s a good stock for the long-term. However, the company’s earnings this week leave a lot to be desired. And, I think the company is due for some short-term pain.

The professional networking website reported revenues well below analysts’ expectations. Moreover, full-year revenue and earnings outlook were also lower than expected. The company is in the process of hiring more employees and investing in data centers. In the long-run, that’s a good thing – but for now, it’s putting pressure on earnings.

LNKD also has a rich valuation and is trading over its key moving averages. As such, we’re going to buy June OTM puts on LNKD in expectation of a near-term pullback. Buy the June $150 puts for $1.30 or lower.