Cloudflare Is Testing Its All-Time High

One of the more constructive developments in the market has been the ability of select technology leaders to regain momentum after brief periods of profit-taking, and one technology name is showing that behavior particularly well. After spending much of the first quarter under pressure, Cloudflare Inc. (NET) established a durable February low, then shifted into a clear sequence of higher highs and higher lows before breaking through resistance and reaching repeated 52-week highs. A recent pullback failed to damage that trend, and NET is now pressing back toward its all-time high, with the moving averages stacked in a constructive bullish structure. What really caught our attention today is the ProfitSurge Buy signal, which has been in place since mid-March as the 21-day EMA has remained above the 63-day EMA, a straightforward indication that medium-term price momentum continues to favor the upside.

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For a move like this, there are several ways to participate, including shares or options, but with NET trading above $330 and considerable time premium embedded in its options, a simple call purchase can require a meaningful upfront commitment. An alternative is an ITM call debit spread, which pairs a purchased call with a higher-strike call to reduce the cost of entering the trade while defining the risk. In the hypothetical setup we’re reviewing, the spread could offer 61.3% profit potential if NET is up, flat, or even down 10.0% at expiration, with the trade costing approximately $620 to establish; the actual outcome, of course, depends on how NET trades and the position is managed.

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Wishing You the Best in Investing Success,