Ugly Duckling
Volatility is rising, speculative names have already been hit, and Ben Berggreen shifts the focus to a new weak spot: consumer discretionary. With sentiment collapsing, unemployment ticking higher, and holiday spending under pressure, several stocks look exposed.
Ben highlights Ulta Beauty ($ULTA) — a company facing slowing growth, margin pressure, and its first loss of market share — yet still trading near the top of its multi-year range. With earnings in early December, he walks through a bearish calendar ratio put spread offering asymmetric reward if the stock rolls over.
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The timing on this ULTA bearish setup is intresting with earnings coming up in December. The fact that they're losin market share for the first time while still trading near multi-year highs does seem lke a disconnect, especially with consumer sentiment weakening. That calendar ratio put spread sounds like a smart assymetric play if the stock does roll over post earnings. Are you seeing similar vulnerabilities in other discretionary names?