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After months of predictions and speculation, the bid for TikTok is finally moving forward. And it's not with who you might expect.
Now, this deal was a high-pressure one, as the U.S. government has become increasingly concerned with TikTok's collection of personal user data and its relationship with the Chinese government.
The Trump administration's main concern was that the Chinese company could use the data it acquires for blackmail, corporate espionage, or to track government employees.
This concern led to many large companies throwing their hat in the "TikTok partnership" ring – including Walmart Inc. (NYSE: WMT) and Microsoft Corp. (NASDAQ: MSFT). But neither of these heavyweight names came out on top.
Instead, TikTok is teaming up with Oracle Corp. (NYSE: ORCL) to solidify its continued business in the United States. Oracle is an American computer technology corporation, headquartered in Redwood Shores, Calif., that sells database, software, and cloud-engineered systems.
What might be the best part of this deal is that it's opened up an opportunity for traders like us to capitalize on – which I'll show you right now…
Where's the Money?
TikTok has become one of the top social platforms in the world in a seemingly short amount of time. Well, the company mostly owes its rise in popularity to the pandemic, as it has been able to offer endless entertainment to millions of people stuck at home.
To put it into perspective, the app has well over 100 million users in the United States alone. And the users range across all ages.
Now, that might not seem like such an important point, but here's the thing – this deal could make Oracle more visible to young consumers and give it control over a prominent advertising venue.
You see, online advertising happens to be one of the biggest industries in the world. In fact, I would chalk this up as another win for Oracle. Investors are, too, seeing as how Oracle's stock jumped once the partnership news hit the airwaves.
But before you follow the crowds, here's what you need to know…
The stock market is severely overbought. I believe we'll be seeing a lot of volatility leading up to at least the election. That's the exact reason why I have no intention of adding ORCL to my portfolio.
Instead, I will be looking at the loser of the TikTok deal battle, Microsoft.
The combination of the overbought market and Microsoft's losing bid puts MSFT in position to go lower between now and the end of the year. And I genuinely believe that we are at a short-term top for the market and the technology sector.
So, you may ask, how does one play MSFT with such a downturned market outlook? Simple: out-of-the-money put spreads. The spreads will allow you to profit off the TikTok decision, all while respecting your risk tolerance and your bottom dollar.
I just shared with you the details on some major acquisitions that are showing signs of serious profit potential.
Events like this are specifically what I programmed my S.C.A.N. trading system to take into account when making recommendations…
By the time other investors are becoming informed of a stock that's trending upward, we've already collected profits because we saw the move long ago!
My Project 303 readers are constantly receiving new picks from this system, and I want you to join us for the next round.
Click here now to learn how you can be a part of Project 303.
About the Author
Andrew Keene, editor of the 1450 Club, Super Options, and Project 303 at Money Map Press, is a globally known trader and a renowned expert on all things options.