Zscaler (ZS): Racing the Knife After the Quiet Crash

By Juri von Randow · 7 April 2026 · Tuesday Target 15/52 2026

Zscaler after the tech de-rating: why the crash already happened, how the Iran shot clock feeds a squeeze, and how defined-risk calls fit.

The Bunker Missed the Crash

There is a type of investor permanently braced for the big blow-up: the AI bubble bursting, the war going wide, Wall Street finally paying for its sins. My argument in the letter is that they are guarding the wrong door. The crash they fear has been clocking in for weeks. Megacap tech multiples have been cut from 31x to 24x since the start of the year, and American tech now trades cheaper than European tech once you adjust for growth, a sentence I never expected to write. Hedge funds hold the least exposure to the darlings in years, trend followers are as short as they have ever been, and a staggering amount of equity length has been dumped inside a month. The bubble the pundits debate on television has been letting the air out in front of them.

Now add the war, which has a shot clock. The Iran deadline billed as final has been shifted repeatedly inside a fortnight, missile stocks are thin, escalation dominance has drifted toward Tehran, and presidential approval is sliding while the midterm map worsens with every cent at the pump. Gasoline politics gives the White House about a month to find an exit. Put those together and the contrarian read is almost embarrassing: the de-rating is behind us, the war has an expiry, and the remaining unpriced move is a squeeze higher when somebody, anybody, pulls the trigger.

Agents That Relax Too Much

Why this name rather than an index call? Because Zscaler sits exactly where the next accident happens. Every company bolting AI agents onto its network is opening doors it does not know exist. The agents get lazy, trust the wrong thing, and hand a sophisticated attacker a tidy way in. Premium security infrastructure just became far more valuable while the shorts were leaning on security software as just another overpriced sector. A business in stupid demand attached to a stupidly cheap stock is the mismatch I hunt for.

A Bulletproof Ferrari for the Knife

Directional punts on erratic headlines are a reliable way to lose money in this tape, because the tape answers to plumbing rather than to whatever Trump said at breakfast. Quarterly collar positions dictate intraday action far more than geopolitics does, and when those positions expire, dealers get pushed into mechanical buying to square their books. Meanwhile retail has given up dipping in, sells every rally, and piles into expensive, leaky inverse ETFs. That is precisely the liquidity a systematic rally feeds on: panic sellers supply the stock, dealers supply the forced bid, and a minor headline becomes an algorithmic squeeze.

So the instrument matters as much as the direction. I want the convexity of trapped shorts and forced dealer flows without owning the downside if the deadline slides yet again and the missiles fly. Defined-risk call spreads do that job: the premium at risk is fixed at entry, the upside participation is real, and core capital never sits on the table. Think of it as the supercar with armour plating. Quick enough to catch the move, built to survive the road, and if it stalls, the loss was decided before I turned the key.

Shot Clock Meets CPI

The marquee event is Friday's March CPI, where Deutsche Bank expects a gasoline spike to produce an ugly headline and lift the annual rate to 3.4%. Thursday brings February PCE and the GDP revision, Wednesday the minutes of a hawkish March meeting, and the front of the week durable goods, Goolsbee, Vice Chair Jefferson, and the Iran deadline in the evening. Beyond the dates, the tells are whether trend followers start covering, since a CTA model flipping long is as good a trigger as any negotiator, and whether retail keeps crowding into inverse products, because that crowd is the fuel. The bears spent a month digging in against a crash that had already happened. Somebody has to be the liquidity when it reverses.

This page is the write-up. The full letter, with the trade and its exit rule, is on Substack.

• ZS

Tech de-rating · Iran deadline · Defined-risk call spreads