IonQ Is Risky, but I Like It

This is good action on Wednesday. A flat day after a big move Tuesday is a positive from a trading perspective. We have a day to catch our breath and watch for the next break, whether it is higher or lower. But a day of digestion is good. I hate chasing V bounces. Some folks don't mind, but it can make holding those dips hard. IonQ has a bit of that V look to it, but Wednesday's pause just below $22 might play out as a needed pause to refresh the bounce from the high teens. I don't want to see this one goes back below $20, though, so that is something I need to watch as the stock bounces between $21 and $22. The chart has the same oversold, bullish crossover characteristic that is common among tech names. While I charted moving averages, they haven't really come into play for shares since the name went public via a special purpose acquisition company deal. And because it falls into the once-was-a-SPAC category, we can expect some extra volatility and the occasional non-sense of being lumped in with other former SPAC companies, even if they have nothing in common. IonQ operates in the $65 billion quantum computer space. Currently, it offers the best performance in the industry, while available on all the major cloud platforms: Amazon Web Services , Google Cloud , and Microsoft Azure. The company offers a strong investor base, including Amazon, Hyundai, Hewlett Packard , and Bosch. The cash generated from the SPAC and its private investment in public equity (PIPE) provides enough liquidity for the company to reach profitability, according to management. Management expects to increase contract bookings by three-fold in 2021-2022. From there, it is expected to more than double in 2023, then almost double again in 2024. The University of Maryland isn't the only institute working with IonQ. Oxford, Princeton, Harvard, MIT, The University of Chicago, and Cambridge all have partnered with IonQ, as well. On the corporate side, the company has partnered with Accenture to leverage its go-to-market teams to broaden IonQ's aim to bring quantum computing to global enterprises. On the finance side, Fidelity is using IonQ's quantum computers to power machine learning techniques to assist portfolio managers, identify asset pricing, and power electronic trading. This even expands into Monte Carlo simulations, risk analysis, and price simulation for investment banks like Softbank (SFTBY) and Bulge Bracket Investment Bank. IonQ has $587 million in cash on the books and year-to-date total contract value bookings of $15.1 million. While still in the early growth stages, an adjusted net loss of $7.9 million (before interest, taxes, depreciation, and amortization) means the company has plenty of cash to operate, grow its bookings, and begin to realize the revenue from those bookings that will move it into the black. This is a risky name, but I like the idea of selling puts here to potentially buy lower. The trade: Sell to open Jan. 21, 2022, $17.50 puts at $1.85 Net credit: $185 Max risk: $1,565 Max reward: $185 Breakeven: $15.65 -26% below current price Days until expiration: 44

IonQ Is Risky, but I Like It

Here's how I would play this computing name with a 'V' look to it.

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