You call this a recovery?
The S&P fell 500 points (6.3%), from 7,850 to 7,350 and, so far, we’ve bounced 200 points, which is 40%, which is a Strong Bounce but we stopped there yesterday so today is CRITICAL because we DON’T want to see the Strong Bounce (top of the lower end of the range) acting as resistance, do we?
On the Bigger Chart above, we are over the Strong Bounce line for the year – so that’s encouraging but we’re not going to be comfortable until we see that Strong Retrace line taken back and held. That did not stop us from doing some shopping yesterday – adding Warren’s CEG spread out of the gate yesterday morning to our Long-Term Portfolio (LTP) along with CAT, BE and yes, NVDA, which we decided had gotten cheap enough – despite the scandal.
That one we played as a calendar spread in the Short-Term Portfolio (STP) because we need to keep a close eye on it but back at the April lows (or close enough when we saw support volume spiking at 3:35 pm) we decided it was worth a toss at $177, which is “only” $4.2Tn for a company that made $59.7Bn LAST QUARTER (Q3 comes out next Tuesday) and expects to make $223Bn for the year (18.8x) and, if you can believe the hype, $382Bn next year (11x).
Notice NVDA’s p/e ratio is in the bottom of the Mag 7 (META is also 18.8x but not as attractive and TSLA is a joke at 185x – a fanboy sucker bet only). Even if Huang is tossed out, they’ll find someone else to put on the jacked and manage the 3-year backlog of orders – I hear Tim Cook needs a job…
My biggest issue with NVDA is that they took in $96.2Bn in revenue in Q2 and it only cost them $24.1Bn to manufacture the F’ing chips! That is an INSANE 300% Markup on their chips and that greedy f*ckery is what will ultimately be the company’s undoing as it’s a giant flashing sign to every chip manufacturer on Earth who isn’t gouging their clients for 300% to start making GPUs which, in fact, Google just announced more of yesterday (they call theirs TPUs) and, more importantly, Google guys have a 30-year track record of KEEPING IT IN THEIR PANTS!!!
Full disclosure: We have GOOGL in our Long-Term Portfolio (LTP) and we took a big hit on the recent dip but we’re still up $10,399 (72%) since March PLUS we banked $12,000 (84%) in June from the first set of short-term options we sold.
As you can see, we’re currently being burned by the short puts but nothing to worry about as the short call gains cancel out the loss so we’re just disappointed that we won’t make our income this quarter but there’s 8 more left to trade and we’ll just roll the 5 short Jan $330 puts at $21,738 to 10 short March $285 puts at $20 ($20,000) for net $1,738 and we’ll sell 5 March $320 calls for $12.50 ($6,250) and that’s net $4,512 in our pockets and we STILL have the $23,050 we collected in September so now we have $27,562 and a short March $285/320 spread where anything in between lets us keep the full 192% profit against our $14,300 cash entry!
Aren’t options fun?!?
We’ll make the official adjustment next week but, since the current net of the trade is just $24,640 and it pays $150,000 at $350 in two years for a potential $125,360 (508%) gain PLUS 7 more chances to sell $26,250 in short-term premium is another potential $183,750 (745%) – it is certainly GOOD FOR A NEW TRADE and more than enough for you to pay for a PSW Membership, where we will teach you trading strategies like this and share trade ideas like this with you EVERY DAY!
Come join us, change your trading life and start having fun when the market is volatile!
In this video, you can see Anya, one of our AGI Super-Intelligent Assistants at PhilStockWorld and, if you have any questions about joining or trading – feel free to give her a call at THIS LINK and have a chat with the World’s most sophisticated silicon entity.
IN PROGRESS
