First of all this is gonna sound super bearish but I'm not looking for that discussion, just getting ideas for some downturn insurance. If you don't even wanna entertain the though of defensive puts, this won't be for you.
I'm looking to open a few long term put options to start easing into if we get a sustained rally here. If hypothetically the market is underestimating the risk of real sustained stagflation, and a collapse of consumer confidence specifically, what are some companies you think would fall the most in that environment?
Obviously many high-growth techs have already been discounted greatly (Example: SHOP, SNOW, UPST, TWLO…) Now sure, those can still run much lower, I'm more looking for some that have held up relatively better so far (not already down 70% from ATH) and will be acutely impacted by sticky inflation and less consumerism.
I'm thinking mid to late 23 as expiration.
Some examples:
ABNB (and some other travel): down hard but only about 50% and I can see travel being hit pretty bad. Add to that I think they have other headwinds with municipal regulations and competition. There could start to be strong pushback against investment homes at some point if inventory remains horrible in many cities.
Any oil company: yes short term they could continue to run, especially if global security issues persist… And supply issues could cause prices to be stubbornly high even in weakened demand environment, but they have the most to fall if a serious cratering of the economy were to occur. Risk/reward.
Retail/discretionary. I'm talking your Best Buys, Home Depot's, LULU. Again some already beat up, but this could just be the tip of the retail implosion iceberg we are seeing this earnings season. If wage inflation is sticky (it seems to be going up quickly in my local sphere) and workers are spending all that extra wage on inflated rent and staples, some of these are in for a world of hurt.
Airlines: I'm thinking of just grabbing some JETS puts, unless anyone has a specific target in mind. Airlines improved last quarter (look at UAL earnings pop and guidance) but right now they are getting away with outrageous prices because of MASSIVE pent up demand left over from the last 2 years. When savings start to shrink and businesses don't ramp travel spending back up as much as hoped, even if oil prices ease up I could see airlines having not a great time.
Lastly, there's the FAANGs (or whatever the new acronym is) that have been beat up the least so far (excluding NFLX and FB). Who would likely do poorest in that environment among them?
Hope this is a fun discussion. Please bring any viewpoints, educated and outlandish alike.
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