Since Meta (META) has outperformed its large-cap peers in recent weeks, it's likely to underperform if the market, including the Nasdaq, sells off, Don Kaufman, a co-founder of TheoTrade, said on Schwab Network yesterday.

With the market selling off sharply today, Kaufman's thesis looks set to be put to the test. He discussed an options strategy that investors can use to profit from a decline of META stock over the next 10 weeks or so.

The longtime trader recommended buying the $535 puts on Meta that expire on June 20 and selling the $525 puts that expire on the same day. He noted that traders who use this strategy will pay a net premium of $3 for each pair of puts.

Meta's Chart Analyzed

Appearing on the same segment as Kaufman, Schwab Network's Kevin Green reported that $530 to $540 could be an area of support for the name. He believes that the stock could fall to this level, and he identified $600 as an area of resistance.

The Recent Price Action of META Stock

In the last month, the shares have dropped 7%, while they are down 3.5% in the last three months.

While we acknowledge the potential of META, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than META but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.