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Which Way Wednesday – What Happened to Top Trade Alerts?

It's been a while since we had a Top Trade Alert.

Top Trade Alerts are the trade ideas we like the most in any given week, the ones we feel as very likely to do well and usually we are running with around an 80% success rate, which is amazing.  I often tell our Members that the reason we are so successful with our trade ideas and futures plays is not because we are so good at picking winners but because we are so good at NOT picking losers.  

When you decide to be a trader, professionally or as a hobby, you tend to sit down at your desk looking for things to trade but, like a good baseball hitter, the thing you have to learn is PATIENCE – if you don't wait for a good pitch, you are going to swing and miss a lot.  In baseball, it's just a strike but in trading, it's a loss!  

Home run hitters tend to strike out a lot because they swing for the fences and, while it's spectacular when they connect, many great home run hitters are terrible batters because that's all they do well while almost any player with an 0.300 batting average is going into the Hall of Fame.  An 0.300 trading average is not great, but, if you learn how to manage your money correctly, it can work but traders who can bat 0.500 (50%) and manages their losses will always get into the hall of fame.

Cardinals Strikeout GIF - Find & Share on GIPHYThe highest batting average in baseball history was Ty Cobb, who battet 0.367 but, because he didn't swing at pitches he didn't like, he also walked a lot and his "On Base Percentage" (times he got to first base) was an amazing 0.433 – almost half the time he got up, he got on base!  Being selective in your trades will also get you to first base (profits!) much more often but that, unfortunately, means there are certain times – or UNcertain times like these – when you are better off not swinging at all.  

While we were happy to buy stocks when they were cheap earlier in the year, there simply aren't too many bargains left and, so, not a lot of Top Trade Picks recently.   Our last one was a month ago on June 3rd and that was IMAX, because we thought they would do very well if the re-opening was successful (not really so far) but China is doing well and so are parts of Europe so I still like our IMAX trade for the long term, but we'll have to roll our short puts out to longer strikes when they become available.  

The Top Trade Idea before IMAX was Harmony (HMY) on May 29th, which was also featured in that day's Live Member Chat Room under: "Faltering Friday – Low-Volume Rally Sputters into the Weekend".  That trade idea is in our Long-Term Portfolio and is already on the way to make the full $10,000 (100%) profit by January if HMY simply stays above $3 and possibly much more if we can roll the short calls:

HMY Long Call 2022 21-JAN 1.00 CALL [HMY @ $5.05 $0.00] 100 5/29/2020 (562) $24,000 $2.40 $1.75 $2.40     $4.15 $0.00 $17,500 72.9% $41,500
HMY Short Call 2021 15-JAN 3.00 CALL [HMY @ $5.05 $0.00] -100 6/4/2020 (191) $-9,000 $0.90 $1.40     $2.30 $0.00 $-14,000 -155.6% $-23,000
HMY Short Put 2022 21-JAN 3.00 PUT [HMY @ $5.05 $0.00] -50 5/29/2020 (562) $-5,000 $1.00 $-0.38     $0.63 $0.00 $1,875 37.5% $-3,125

See, it's a nice, conservative spread that we spent $10,000 on and will double if HMY just stays over $3 and it was at $3.50 at the time!  You don't have to swing for the fences to hit a home run – the home runs will come sometimes if you just get a lot of hits!

The Top Trade Idea before that was May 22nd, when Arconic (ARNC) came up in our chat room and we decided that would be a very likely winner – so I posted it as a Top Trade Idea for our Future is Now Portfolio.  We ended up spending net $3,050 and already the spread is at net $4,275 for a 40% gain in less than two months and, more importantly, it's welll on the way to being in the money in January and paying  us the full $8,000 for a 146% gain in 8 months – very nice hitting!  

ARNC Long Call 2021 15-JAN 8.00 CALL [ARNC @ $14.12 $0.00] 20 5/22/2020 (191) $9,900 $4.95 $1.70 $4.95     $6.65 $0.00 $3,400 34.3% $13,300
ARNC Short Call 2021 15-JAN 12.00 CALL [ARNC @ $14.12 $0.00] -20 5/22/2020 (191) $-5,400 $2.70 $1.20     $3.90 $0.00 $-2,400 -44.4% $-7,800
ARNC Short Put 2021 15-JAN 10.00 PUT [ARNC @ $14.12 $0.00] -10 5/22/2020 (191) $-1,450 $1.45 $-0.23     $1.23 $0.00 $225 15.5% $-1,225

In fact, our entire Future is Now Portfolio is already up 41.5% for the year after starting it on 12/12 with $100,000, in honor of my Dad's (who was a futurist) birthday.  We have only made 8 picks in 7 months but, because we chose carefully, NONE of them are losers.

Well, 7 picks really as we liked Sunpower (SPWR) so much we picked it twice.  Gee, who'd have though solar energy would be a thing, right?  Speaking of the Future, back on May 21st, in our Member Chat Room, I mentioned to our Members that we were helping to get PPE equipment, including 3M masks for those in need and I said at the time:

As a company, I'm liking 3M (MMM).  They won't make much money on the masks but they are going to sell Billions of them for $2 and that will bump their revenues up considerably.  $146.50/share is a market cap of $84.25Bn and they are dropping $5Bn to the bottom line so not super-cheap but not unreasonable – and they do have one of the hottest products on the planet.  For the LTP:

Sell 5 MMM 2022 $130 puts for $18 ($9,000) 

Buy 15 MMM 2022 $130 calls for $29 ($43,500) 

Sell 15 MMM 2022 $160 calls for $14.50 ($21,750) 

Sell 5 MMM July $150 calls for $5.40 ($2,700)

That's net $10,050 on the $45,000 spread and we'll sell more premium along the way but the upside is about $35,000 (350%) as it stands so a great way to get started on a Blue Chip industrial.    

MMM Long Call 2022 21-JAN 130.00 CALL [MMM @ $154.82 $0.00] 15 5/22/2020 (562) $42,300 $28.20 $5.93 $28.20     $34.13 $0.00 $8,888 21.0% $51,188
MMM Short Call 2022 21-JAN 160.00 CALL [MMM @ $154.82 $0.00] -15 5/22/2020 (562) $-20,625 $13.75 $3.00     $16.75 $0.00 $-4,500 -21.8% $-25,125
MMM Short Call 2020 17-JUL 150.00 CALL [MMM @ $154.82 $0.00] -5 5/22/2020 (9) $-2,700 $5.40 $1.03     $6.43 $0.00 $-513 -19.0% $-3,213
MMM Short Put 2022 21-JAN 130.00 PUT [MMM @ $154.82 $0.00] -5 5/22/2020 (562) $-9,250 $18.50 $-3.98     $14.53 $0.00 $1,988 21.5% $-7,263

As you can see, we're already at net $15,587 from our net $9,725 entry so up $5,862 (60%) in 2 months on a very conservative entry on 3M based on some very simple fundamentals we thought were leaving the company undervalued below $150 at the time.  Fundamental trading is easy – PATIENCE is hard….

CSCI 448 - Mobile Application Development- Assignment 2 - Global ...Other Top Trade Ideas in the very merry month of May were:

Every single one a winner (so far) so we're batting 1.000 (1,000, as they say) and, as far as I'm concerned, we are batting 1,000 in June as well as we only made one pick but then, when the re-opening did not go as planned, we decided NOT to play for the rest of the month while we stepped back and waited for more clarity.  

So far, we are still waiting.

And happy 3M cases of Covid America, less than 30 days ago, we crossed the 2M mark and here we are at 3M after a fabulous re-opening.  4 more years!!!

Remember on 9/11/2001, when 4,000 Americans lost their lives and our Government made a no-holds barred effort, not to save the economy, but to save the American people from further harm?   

Those were the days….

 

39 COMMENTS

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Let's re-open the schools – 60k more cases yesterday! We have basically decided to try herd immunity it seems! Good luck to all of us.

Irony has been taking hits lately:

Join Phil at 1pm (Eastern) today for this week's webinar here..

https://attendee.gotowebinar.com/register/4730825108469209871

Hello, the webinar link does not seem to work

Good Morning.

Phil / Webinar link – does not look the same as the previous link we were directed to.   This one is looking for a password…

socioeconomic event – Not only sociology, but probably could also have a whole university psychology course on how narcissism has driven policy during the Trump administration.

~~Phil/TQQQ

I have a bear put spread of Jan 21 – 90/55 – 4 quantity. How can I adjust this? I can move the 90 put to 100 Put for $4. But the short 55 Puts are reducing price and a very slow rate as compared to the 90 as of course they are way out of money. May I can move the short 55 to higher strike and closer expiry? So move the long 90 Put position to 100 strike for $4 and the move the short 55 Put to July 31st 100 Put for $5.25

regards

Phil / Webinar – working now.

Stg looking at all the comments people need to slowly wake up to the fact, that Nabors around them are getting infected like flies. Dying with the thousands and only lock down, masks and distance from each other can bring the situation under control until a suitable vaccine is found.
Trump must be feeling like the last days of Hitler!!!! Surely there must be still some intelligent people in the US who see what is going on????

Stupid question for the healthcare professionals on the board, but I’ve read quite a few articles recently that the COVID antibodies only last from a few weeks to a few months, at which time one can be infected once again. While I know we are still learning about the virus, how does this loss of antibodies bode for a vaccine?  Societies (and investors) are banking on a vaccine, but if antibodies aren’t for life, what good will a vaccine do?  Perhaps it will have to be a seasonal or regularly taken vaccine (received every few months, annually, etc), similar to the flu?  Great for the pharmaceuticals if that’s the case…..

The situation is so sad – to say the least. Being a member here and having families and friends in many places give perspectives.   I don't check COV numbers daily, but just looking at the trend lines, in those places that have not yet got it under control, it's past the point of no return. 

From the beginning, we knew any infected can be patient zero, and there are so many examples to draw from on what is working/not. The "3 Basic actions" that can be taught in school with kids get rejected by leaders and now millions of people sacrifice.

200,000 people a day infected / 5,000 dead is like a town or small city somewhere on this planet?

Marz/Antibodies

So far as I can tell there isn't great data on the durability of the immune response after infection. There seem to be a few reports of antibody titers diminishing rather quickly after infection. I'd take the information in the media with a grain of salt as usual since it doesn't seem to be really clear yet. It's not entirely clear what antibodies they are referring too, some are much more evident early in infection, others should be present at lower levels when not actively infected (immune memory type of thing).

As far as a vaccine goes, your concern is valid. That of course is one of the biggest challenges in development and testing – ensuring the immunization is reliable in large populations and understanding how long an innoculated individual will have an appropriate immune response.  

From what I can tell, and it's early, is that we may expect vaccination to be similar to the flu (annually), and may or may not require booster administration. I have faith in those developing the vaccines, whatever comes to market will have to be durable and cost efficient to administer/produce. 

I'm just a simple surgeon so this is outside my area of defined expertise, but obviously this is a hot topic in all of healthcare and we have been trying to keep up to date on all of the new developments. 

Agree with jeffdoc, I am just an interventional radiologist so not my area of expertise, but there is still a tremendous amount we need to learn about Covid-19, not just the immunology of the vaccines that will be developed.

do u  still like /cl short at 41 today phil

Phil / SPCE

Morning.  I wanted to search before asking but didn't find my answer.  What's your take on SPCE?  Is there a price point you feel a call-spread / put sale is worth the risk?  I discovered today they are a SPAC or blank-check company, is a shell company that has no operations but plans to go public with the intention of acquiring or merging with a company with the proceeds of the SPAC's initial public offering.

I have no idea how to apply a valuation so anxious to hear your take.

thx!

Antibodies/

Dadgum, I just wrote some words of wisdom, then was informed that I was posting too fast and my post was eaten by the gmork. I'll copy it before I hit submit this time. Anyway, the antibody research I've seen is mostly lab, often in vitro work, and translating that to human population response is perilous. Jeffdoc has it right, though, if the preliminary numbers are right, then annual boosters are what's needed, although I suspect that a few rounds of that and we won't see the bug again unless it has a non-human reservoir to hide in. It doesn't need to be perfect, just good enough. With masks, for example, if you assume masks are as effective as your average vaccine at preventing transmission, 80 – 90% range, then to stop the epidemic you need around 2/3 of the population using them. That's assuming an Rt of 2.4, which is high unless you're in Florida or Arizona – 😉 – but that 2/3 of roughly the level you need for herd immunity, i.e. to get Rt below 1. All that said, like Jeffdoc and Millardd2010, I'm not an immunologist, my field is epidemiology, but maybe between the three of us we can make some reasonable conclusions.

Thank you Snow, Jeffdoc and Millard…..your insights and guidance are very much appreciated!

Phil/webinar

how about a trade in aapl? Long, short, or neutral. Something that makes a little money…not trying to get rich

How about selling some TSLA $1800 calls for this Fri?

You're welcome, Marz, and Maya just arrived, we could ask her to chime in as well, since she's a physician…

Mars/antibodies

as Snow said, the situation is far from clear.

we know that 'most' people develop antibodies

we don't know if ALL antibodies are protective (neutralizing)

We don't know yet, exactly how long the antibodies last.

even if they don't last, it's possible that there is some 'memory'- recent study from Japan showing initial spike in IgG after reinfection, before the spike in IgM, possibility of the 'memory' theory.

overall, we don't yet know if the vaccines that are in development will last and how long. Perhaps they will prevent people from getting real sick- and that may be good enough.

there are companies working on replication or antibodies, rather than 'true' vaccines…that may work?

I do think that an antibody cocktail (something like what Regeneron is known to produce) would be a big win. Convalescent plasma does appear to work in many cases of Covid 19 and this would be a similar method of treatment, just more precise and scalable. If they, or someone like them, can identify a set of effective antibodies to produce we would be in much better shape. I'm really hoping this can be developed/identified sooner than the timeline for a vaccine. It would allow treatment in hotspots to provide some local population immunity (transiently) to decrease the number of available hosts for the virus. 

phil/TSLA

$1700 calls could be sold for $1.20? for this Fri

Not safe?

NLOK/Phil   Phil thoughts on NortonLifelock

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