Vertiv (VRT) Might Be a UFO!

I was practicing some vert skateboarding when I thought I might have found a UFO! But before that…

What's the Word on the Street?

The market is down again today. While waiting for the Federal Reserve meeting minutes from last month to release, the President called for a Fed governor to resign due to alleged fraud. The market wasn't particularly happy with that, because it could be a way for the President to appoint someone that would vote for the large interest rate cuts that he wants.

The aforementioned meeting minutes showed that the Fed was worried about how tariffs might push up inflation, but ultimately decided against cutting, save for 2 dissenters.

We might glean more into the mind of the Fed and the path of interest rate cuts when Chairman Powell speaks Friday at the Economic Symposium in Jackson Hole.

Vertiv (VRT)

What Is It?

Vertiv Holdings Co. engages in the design, manufacture, and service of critical digital infrastructure technology for data centers, communication networks, and commercial and industrial environments. It also offers power management products, switchgear and busbar products, thermal management products, integrated rack systems, modular solutions, and management systems for monitoring and controlling digital infrastructure. It operates through the following geographical segments: Americas, Asia Pacific, and Europe, Middle East, and Africa (EMEA). The Americas segment offers products and services sold for applications within the data center, communication networks, and commercial and industrial markets in North America and Latin America. The Asia Pacific segment includes products and services sold for applications within the data center, communication networks, and commercial or industrial markets throughout Greater China, Australia and New Zealand, Southeast Asia, and India. The EMEA segment focuses on products and services sold for applications within the data center, communication networks, and commercial and industrial markets in Europe, Middle East, and Africa. The company was founded in 1946 and is headquartered in Columbus, OH. The listed name for VRT is Vertiv Holdings Co Class A Common Stock.

Why Is It a Possible UFO?

Primarily its current share price relative to its fair value and what other option traders expect are the reasons VRT could be a UFO.

What About Recent News?

VRT received a downgrade yesterday and took a hit from that, but it's an outlier compared to other recent ratings. Their argument was that VRT's current stock price already "reflects peak growth for 2027-2028 and does not factor in rising competition or supply risks."

Otherwise, it's a tech stock that has taken a beating alongside other tech stocks recently. But it's a beneficiary of companies spending money on data centers to power their artificial intelligence ventures - which doesn't appear to be slowing down.

What's the Current Price?

VRT has had a nice move so far this year, but it rose more in the past 3 months (~20%). It's down slightly on the month, but sharply on the week (~12.50%). It's down again this morning along with most of the market, so I decided to trade it.

What’s the Fair Value?

I’d first like to emphasize that fair value is subjective. Many analysts at many banks and institutions rate stocks differently and assign fair value in their own unique way. So, what I like to do is take all the recent fair values since the most recent earnings report and average them. In this case…

Since VRT's most recent earnings report on 07/30/2025, it has received 7 ratings and taking the average, the fair value might be somewhere around: $142.14.

4 ratings are a Buy, 1 is a Hold, 1 is a Sell, and the Morningstar rating is unknown. The lowest price target is $112, while the highest is $173.

What Do Options Traders Expect?

Calls are trading over equidistant Puts, which means traders think there is a chance to the upside. You can see because… forget about the green columns and focus on the red. Notice how on the right side for the $124 Put it says $6.00, it’s $7.20 for the equidistant Call at $129.

The premium (the credit you receive for executing the trade) is currently less for selling Puts, as opposed to selling Calls. Basically because of that, option traders expect the stock to go up, rather than down.

How About Volatility?

The IV rank (the purple line) for VRT (stock price in blue) is currently hovering around 10.33, which is pretty low (IV rank goes from 0-100). This makes short strategies (which are what I prefer) less attractive.

What's the Trade?

My preferred trade is a variation of the wheel without the rolling, AKA cash-secured puts. I typically like to target stocks that offer a dividend and are below fair value. 

Why a dividend? If the trade results in assignment and I’m on the hook for X amount of shares, I can at least be satisfied knowing I picked a (hopefully under fair value) company that will pay me a small amount while I run the other side of the trade AKA covered calls.

VRT does offer a dividend, but it's low with a yield of 0.11%.

It’s a fairly low-risk strategy (all options trading is risky!), that has a higher probability of success, but requires a higher amount of collateral. 

So if you saw the most recent image above, I already STO (sold to open) 1 contract of the $110 Put for the September 26th expiration. I like to have a DTE (Days To Expiration) that is around ~45 days.

When the trade reaches 50% profit I will buy it back. I don’t like to be greedy and go for more profit, because I would rather not waste my time being in a trade for too long.

What About Alternative Trade Ideas?

1. If the collateral requirement is too high, another idea is a put credit spread. You would sell a put at a strike below the current share price and then buy a put at a lower strike than the put you sold. By doing so, you will avoid the collateral requirement of a cash-secured put, but the credit received will be smaller. Also, if the trade goes sideways, you will not be assigned shares so no collecting dividends and running covered calls afterwards.
2. Just invest! 1 share or even fractional shares are a way to get a foothold in a stock that you think might increase in value.

Wait…Where Are the Candlesticks? And All the Other Indicators?

I know many traders love their candlesticks and a ton of indicators. I prefer simplicity. Candlesticks aren’t necessary unless you’re the kind of trader that wants to try and pick the perfect moment to execute a trade, and even then it’s not a sure thing. 

As for indicators, there are a ton. Some of them work sometimes. None are perfect. I don’t want to get bogged down with too many. You’ll drive yourself crazy looking at too many of them, so find a handful you like and stick with those.

Disclosures

• I currently have an open trade with VRT (as mentioned in this post).
• No trade is a sure thing. There is always risk involved. 
• This blog post is not meant to take the place of financial advice, but hopefully acts as a guide for learning or informational purposes.