Mike Khouw: I was wrong about Zscaler. Here's how I'm managing the trade

Warren Buffett's maxim to "be greedy when others are fearful" is among the most quoted pieces of investment wisdom, but contrarianism is not a strategy in itself. In Zscaler's case, the post-earnings price action delivered a painful verdict. My thesis this week for a bearish-to-bullish reversal rested on the idea that ZS had been unfairly punished and that the 50-day moving average was turning positive. Despite beating past-quarter expectations on both revenue and earnings per share, the stock was brutalized by what came next: fiscal 2027 guidance pointing to roughly 16.5% growth, a figure that landed well below analyst expectations. Compounding the valuation reset was the sudden departure of two senior sales leaders. Leadership turnover precisely when growth is decelerating only raises more questions. Is it a good idea for us to wait for answers? There is also the macro context Jim Cramer identified this week: institutional money continues to sell the group to chase the parabolic moves in semiconductors. That rotation dynamic does not care about discounted cash flow models; it cares about momentum. Stock Chart Icon Stock chart icon Zscaler, YTD The July 165/185/220 call spread risk reversal, put on for modest credit, has lost approximately $35, with a $59 decline in the underlying. …