The great Jim Cramer often says, “It doesn’t matter where the stock was, only where it goes.” This is great advice and worth keeping in mind when looking at stocks. Vertive Holdings.
Vertiv, headquartered in Westerville, Ohio, is a power equipment manufacturer whose DC power systems, heat removal, data center cooling solutions and other equipment are critical to data centers. Given the significant capital spending in this space, it’s no surprise that Vertiv CEO Giordano Albertazzi raised guidance on his Q2 2026 earnings call, reporting 24% net sales growth and 410 bps expansion in adjusted operating margin, saying, “We have raised our full-year 2026 guidance on all key metrics. Momentum is strong, broad-based, and accelerating.” He added: “I am more confident than ever in our trajectory today.”
However, at the time of the announcement, the stock experienced a slight decline, not because of the outlook, but because concerns about supply chain-related delays pushed some of the selling into the second half of the year. The stock has now recovered and is just below its important 150-day moving average. Here’s a little perspective. Investors could be forgiven for taking profits, as Vertiv’s stock price has risen 1043% over the past five years, similar to Micron’s.
Vertiv, 5 years
The company is scheduled to next announce its financial results on October 22nd. Assuming there are no further delays and the company remains on track to meet (or exceed) its previously reported quarter’s lofty full-year guidance, it could potentially regain more ground it has given up since its mid-May highs.
My recommendation is a longer term call spread risk reversal that captures the October return, and especially the January 240/290/340 prices are very close to “even”, i.e. no net debit or credit of option premium. In the worst-case scenario, the stock buys at $240, which is more than 14% below where the stock is currently trading and not far from the post-Q4 earnings low reported in February. The maximum profit is $50, which is more than 20% of the $240 short put strike.
In normal situations when I am net shorting options, I prefer 15-60 days. This deal is much longer term than that. The reason is that you have a little more flexibility in terms of when you realize profits or losses. If your trade goes well, but you don’t want to realize a profit in 2026, you can hold your trade past the end of the year. These are not long-term options and trades result in short-term capital gains or losses, but if timing those gains or losses in 2026 or 2027 is important to you, setting an expiration date in early 2027 gives you a little more flexibility.
Disclosure: Tidal owns/holds all securities mentioned in the article.
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This content is provided for informational purposes only and does not constitute financial, investment, tax, or legal advice or a recommendation to purchase any security or other financial asset. The content is general in nature and does not reflect your unique personal circumstances. The above may not be appropriate for your particular situation. Before making any financial decisions, you should strongly consider seeking the advice of your own financial or investment advisor.
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