Shopify’s stock jumped 20% after it shared impressive second-quarter results. The Canadian ecommerce platform experienced a 30.7% increase in revenue compared to last year, driving shares to a three-year peak. Currently, Shopify’s stock is priced at $152.50. In contrast, the S&P 500 and NASDAQ saw rises of 0.6% and 0.8%, respectively. Meanwhile, India is facing an additional 25% tariff from the US, raising the total to 50% to limit Russian oil trades. For the June quarter, Shopify’s net income, excluding investments, soared to $906 million. This is a significant leap from $171 million last year. The free cash flow margin held steady at 16%, growing from $333 million the previous year to $422 million in Q2. Shopify’s revenue hit $2.68 billion, surpassing Wall Street expectations by $130 million. The company anticipates annual revenue growth in the mid-to-high 20% range for the next quarter and a low-20% rise in gross profit. Shopify’s stock has climbed 43% so far this year, and it has risen 180% over the past year. Although some consolidation might occur, the Relative Strength Index of 68 shows it’s not overbought, indicating potential support around $128 if there’s a pullback. Given Shopify’s remarkable second-quarter results, we see a strong bullish trend for the stock. The 30.7% growth in revenue and increase in net income show solid business health. This momentum, which has pushed the stock to a three-year high, suggests positive sentiment we can capitalize on. To take advantage of this strong performance, we are eyeing call options with September and October 2025 expiration dates. Recent option flow data from August 5th indicates call volume is nearly three times the daily average, particularly for the $160 and $170 strike prices. This shows widespread market expectations for further gains in the coming weeks. However, the 20% surge in one day has raised the stock’s implied volatility, making call options pricier. This increase in cost means that while the stock’s direction is favorable, entering a simple long call strategy has become more expensive. We should therefore explore strategies to reduce these high costs. A bull call spread could be a smarter choice, allowing us to express a bullish outlook while keeping down costs and risks. This involves buying a call at a lower strike price and selling another at a higher strike price, thereby reducing the net premium paid. This strategy benefits from a consistent, steady rise in the stock price toward our higher strike. For those of us optimistic about the long-term but expecting possible short-term consolidation, selling cash-secured puts could be appealing. We could sell September 2025 puts with a strike price near the $128 support level. This way, we collect a premium now while having the chance to buy the stock at a discount if it drops. Looking back at similar earnings boosts in the tech sector between 2023 and 2024, we often saw a brief consolidation after a major increase before the next upward movement. This historical trend suggests that patience might pay off. We shouldn’t be surprised to see the stock trading sideways before aiming for new highs. We also need to consider the broader market, as new US tariffs on India might create economic uncertainty. A report from the US Census Bureau in July 2025 indicated a slight slowdown in online retail sales growth, which could be a challenge for the entire ecommerce sector. This highlights that even strong company performance can be influenced by macroeconomic factors. The company’s forecast of mid-to-high 20% revenue growth reassures us about its business strength. The Relative Strength Index is at 68, which, although high, isn’t in the extreme overbought zone above 70, suggesting there’s still potential for the stock to rise. We’ll plan our trades to reflect this positive outlook while managing the risk associated with high volatility.

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