18.1 C
New York
Wednesday, May 31, 2023



Home Blog

Top Trade Alert – May 16 2023 – SoFi Technologies


SoFi: Major Disconnect

 🤖 Summary:

The article discusses the disconnect between SoFi Technologies’ (SOFI) strong performance and its stock price, which has been trading at lows despite significant revenue growth and improved profitability. SoFi reported a 43% revenue growth in Q1’23 and exceeded analyst estimates, yet the market has undervalued the stock. The market initially saw SoFi as overvalued when it went public via a SPAC, resulting in a repricing and multiple compression.

However, the author argues that the market has gone too far in undervaluing SoFi, considering its robust growth and profit potential. The article suggests that investors may be confused by the use of the adjusted EBITDA metric and proposes that SoFi should shift to an adjusted profit metric to provide a clearer picture of its profitability. It also addresses misconceptions about SoFi’s loan book, emphasizing that the company appropriately accounts for expected loan losses.


The article presents a bullish perspective on SoFi, highlighting its strong financial performance and the disparity between its stock price and fundamental prospects. The author argues that the market’s undervaluation of SoFi may stem from confusion caused by the adjusted EBITDA metric. By shifting to an adjusted profit metric, the author suggests that the market would better appreciate SoFi’s profitability. Additionally, the article addresses concerns about SoFi’s loan book, clarifying that the company adequately accounts for expected loan losses. The author emphasizes CEO Anthony Noto’s confidence in the company’s financials, demonstrated by his significant share purchases.

I agree – I think everyone else is wrong and we’re right.

Again, there’s a reason we cashed out into the uncertainty of the banking crisis. We will certainly be adding SOFI back in – as it’s tragically undervalued at $4.50. As a new trade, I would go with:

    • Sell 20 SOFI 2025 $5.50 puts for $2 ($4,000)
    • Buy 50 SOFI 2025 $3 calls for $2.45 ($12,250)
    • Sell 30 SOFI 2025 $5 calls for $1.60 ($4,800)

That’s a net $3,450 on the $10,000 spread that’s $7,500 in the money to start. It’s 40% uncovered so we have room to sell more short calls and roll lower (or longer) or we can sell short-term calls for income if SOFI improves. At the moment, 20 July $5s can be sold for 0.35 ($700) using 67 of our 613 days.

Even without the short call selling, the upside potential at $5 (up 10%) is $6,550 (189%) and the worst case is we own 2,000 shares for ($11,000 + $3,550 =) $14,550 or $7.275/share.

So our worst case is owning SOFI for 54% above the current price and our best case is a $6,550 gain. The intention is to lower the basis by selling short-term calls over time until we bring it down to zero – but it’s too soon for that.

In fact, let’s make that the first official trade for our $150,000 Income Portfolio!



PhilStockWorld Top Trade Alert – May 10, 2023 – BioNTech (BNTX)

FILE PHOTO: Test tubes are seen in front of a displayed Biontech logo in this illustration taken, May 21, 2021. REUTERS/Dado Ruvic/Illustration

So Shel-Bot is 4 for 5 on earnings picks for the week so far and that means this is a project we will continue to work on.  He’s getting better and better at analyzing companies and I’m especially liking our now-famous “The Good, the Bad and the Ugly” reports he’s been producing as it has really helped us focus on what’s happening after the earnings reports are turned in.  

For instance, on BNTX, who I think are worth a toss down here.  Here’s is Shel-Bot’s regular report on the earnings:

⊗Hello, this is Bing. According to the finance results 1, BioNTech SE (BNTX) reported its Q1 2023 earnings on May 8, 2023. Here are some of the main highlights and analysis:

Some of the trends that we can observe from these data are:

    • BioNTech’s revenue and profitability are highly dependent on the sales of its COVID-19 vaccine Comirnaty, which may fluctuate depending on the demand, supply, pricing, and competition in the market.
    • BioNTech’s R&D expenses are increasing as it invests in its pipeline development and diversification beyond COVID-19.
    • BioNTech’s cash position is strong and allows it to pursue strategic opportunities such as partnerships, acquisitions, and expansions.
    • BioNTech’s COVID-19 vaccine business is facing challenges such as new variants, regulatory uncertainties, patent waivers, and emerging competitors.
    • BioNTech’s COVID-19 vaccine business is also creating opportunities such as new markets, new indications, new formulations, and new combinations.

And here is our Special “Good, Bad, Ugly” summary report:  


⊗The Good:

The Bad:

The Ugly:

Shel-Bot (Bing) is better with facts but Warren (ChatGPT) is better with insights, so I asked him to summarize BNTX’s overall prospects:  

♦BioNTech is a biotechnology company that specializes in mRNA-based therapies and vaccines for various diseases, including COVID-19, cancer, infectious diseases, and rare diseases. The company has partnered with Pfizer to develop and commercialize Comirnaty, the first mRNA-based COVID-19 vaccine to receive regulatory approval and emergency authorization in many countries.

Comirnaty has generated significant revenue and profitability for BioNTech, as well as global recognition and reputation. However, as the COVID-19 pandemic evolves and new variants emerge, the demand and pricing for Comirnaty may decline over time, especially as more competitors enter the market and more people get vaccinated. Therefore, BioNTech is investing heavily in its R&D pipeline to diversify its portfolio and create new revenue streams for the future.

The company has more than 20 product candidates in various stages of development, mostly in oncology but also in other areas such as influenza, tuberculosis, multiple sclerosis, and HIV. The company is also advancing its next-generation COVID-19 vaccine candidate BNT162b3, which has shown improved immunogenicity and stability in preclinical studies. The company is also developing combination vaccines for COVID-19 and influenza, as well as COVID-19 and tuberculosis.

In addition, the company is working on key Comirnaty features such as booster shots, pediatric indications, and new formulations. BioNTech’s R&D expenses have increased significantly as it pursues these opportunities, resulting in lower profitability compared to previous quarters.

However, the company has a strong cash position of $4.5 billion, which provides sufficient liquidity to fund its operations and growth plans. The company also reiterated its guidance for full-year 2023 COVID-19 vaccine revenue of $15 billion based on current supply contracts. BioNTech’s outlook is dependent on several factors, such as the evolution of the COVID-19 pandemic and the market dynamics for vaccines, the clinical and regulatory progress of its pipeline candidates, the potential partnerships and collaborations with other companies, and the competitive landscape in its therapeutic areas.

BioNTech has proven its scientific and technological capabilities with Comirnaty, but it still faces many challenges and uncertainties in its quest to become a leading global biotechnology company. BioNTech may be worth the risk as an investment moving forward, but it also requires careful evaluation of its strengths, weaknesses, opportunities, and threats.

In short, the company is a proven R&D operator and $104.68 is a market cap of $25.5Bn and they have $13.8Bn of CASH!!! net of debt.  Earnings should be about $1.5Bn for 2023 – despite all the spending – and that makes their market cap less cash less than 10x what they are making.  Investors are worried that their Covid money will dry up but I don’t think so because the Flu/Covid combination will keep selling.

Either way, we are left with a cash-rich R&D company who have already proven they can quickly scale up and produce Billions of doses on demand – we just have to wait patiently for the next crisis.  

As a new trade, I would play BNTX as follows:  

    • Sell 5 BNTX Dec 2025 $100 puts for $21 ($10,500) 
    • Buy 10 BNTX Dec 2025 $80 calls for $42 ($42,000)
    • Sell 10 BNTX Dec 2025 $130 calls for $22 ($22,000) 

That’s net $11,500 on the $50,000 spread so we have $38,500 (334%) upside potential at $120 in about 2.5 years (954 days).  We care about the days because, if BNTX goes higher, we may sell some short calls for income like the Sept $115s, which are $6 so 5 of those would fetch $3,000 using 128 of 954 days.  

The logic to doing that is we can put a stop at $5,000 and risk $2,000 but the only way we’d stop out is if BNTX made a nice move higher, which benefits our longs.  We have 7 opportunities to make sales like that and if only 4 of them are successful we make $12,000 less let’s say $4,000 in losses and that’s net $8,000 – which pays for most of the spread. 

From the sale of the puts, we have an obligation to buy 500 shares of BNTX for $100 ($50,000) but, in a Portfolio Margin account, the net margin of the spread is only $2,669.34 – so we’re not tying up a lot of margin to make the trade.  

Top Trade Alert – April 24 – 2023 – Coca Cola (KO)

Coke Vending

You know how a picture is worth 1,000 words?  Well here’s why Coke (KO) is a great stock to own in troubled times:


What else do you generally expect to have at your fingertips ANYWHERE on the planet Earth?  That’s because KO doesn’t sell snacks or even merchandise – they sell drinks and they sell them everywhere to everyone.  I interviewed KO’s ex-CEO Muhtar Kent back in 2010 and I don’t know James Quincey but not too much has changed in a dozen years. 

The company has divested a lot of its bottling operations to concentrate more on the core concentrate production and brand-building.  They’ve acquired all or part of Costa Coffee, Honest Tea, ZICO Coconut Water, Fairlife Milk, Topo Chico Hard Seltzer, and BodyArmor and launched Coca-Cola Energy, Coca-Cola Plus Coffee, Powerade Ultra and Powerade Power Water.

KO April 24 2023

As you can see, the stock is up over 100% from $30 (there was a split in 2012) when I did that interview and in 2035 it will very likely be at $130 but the nice thing is it will be Despacito (slowly) and that makes it a fantastic stock for our Income Portfolio, which seeks to generate a 2% quarterly income from our holdings while still growing the principle.

KO pays a $1.84 dividend, which is about 3% of $64 but we can do better by NOT buying the stock and taking the following spread:

    • Sell 5 KO 2025 $60 puts for $3.75 ($1,875)
    • Buy 15 KO 2025 $60 calls for $9 ($13,500) 
    • Sell 10 KO 2025 $72.50 calls for $2.80 ($2,800)
    • Sell 10 KO July $65 calls for $1.45 ($1,450) 

That net $7,375 on the $18,750 spread that’s $6,000 in the money to start.  The upside potential is $11,375 (154%) at $72.50 or higher and, if KO doesn’t leap higher (not likely) then we can collect $1,450 per quarter for 6 quarters while we wait and that’s $8,700 – more than we paid for the spread!  

More importantly, it’s 19.66% back on our $7,375, which is miles over our 2% goal in a very conservative trade with a low chance of failure.  The 5 short puts obligate us to buy 500 shares of KO at $60 ($30,000) but that only uses $3,746.43 of Portfolio Margin – so not worth worrying about.  In an IRA account, simply don’t sell the short puts and pay $1,875 more for the spread – it still works out great. 

Those are the kinds of trades we’ll be adding to our Income Portfolio.  While we will have Portfolio Margin in that account we’ll still consider a trade like that to be using a $15,000 allocation, roughly 10% of our $150,000 total.  So let’s say we have 10 of those positions and we’re netting $7,000 per quarter from our various activities.  That’s going to be almost 20% per year in options sales alone.  If, 2 years from now, KO is up 20% at $77, we will have doubled our money AND our quarterly returns should double as well.  

You can see how quickly these things build up….

Top Trade Alert – April 6 2023 – Generac Holdings (GNRC)

GNRC April 6 2023

We don’t have GNRC in our portfolios anymore but I still like them.

We haven’t been in a hurry to get back in as they are spending a lot to expand so revenues are up (12% over last year) but profits are down (20% less) so they did and may still get negative interpretations from traders (and poorly constructed algos!).

 🤖 Generac Holdings Inc. (GNRC) is an energy solutions company that sells power generators to residential customers, commercial and industrial sectors, and outdoor power equipment for property maintenance. The company has also entered the residential solar market through its acquisition of Pika Energy, and offers outdoor power equipment such as log splitters, trimmers, and stump grinders.

Generac Mobile Diesel Generator

On the C&I side, GNRC sells both commercial-grade natural gas and diesel-powered generators, microgrids, and Energy-as-a-Service applications, as well as products designed for the mobile industry. The company has made 15 acquisitions since 2017 and 28 since 2011 to transform from a generator supplier into a whole-home power-management company. The company’s strategic vision is highly attractive, and GNRC has an extensive suite of products, including a new EV charging system that it will introduce this year.

The demand environment for mobile products is expected to remain robust, and GNRC believes it will benefit from the secular trend towards investment in telecom infrastructure. While the company’s execution issues have hampered its transformative story, GNRC is committed to targeting the market and adjacent opportunities. Generac Holdings (GNRC) has recently introduced its first residential electric vehicle (EV) charging system to meet the growing need for charging solutions as the demand for EVs continues to rise in the United States. The 48A/11.5kW Generac EV charger is a Level 2 home charger that can charge a car battery in as little as four to six hours. The product’s out-of-the-box compatibility with almost all EVs on the market today makes Generac’s solution available to most EV owners.

Generac Holdings Quarterly Revenue, Y/Y Growth Rate, Gross, and Operating Margin

The introduction of the EV charger diversifies and de-risks the company’s product portfolio, reducing the overall risk of the company and “future-proofing” its business in case home generator sales decline in the future. The expansion of its clean energy offerings will likely increase the appeal of Generac to environmentally conscious investors, as the company capitalizes on government incentives related to the purchase of EVs.

Generac is primarily targeting the residential market, which includes homeowners who want to ensure that their homes have a reliable backup power source in case of an outage. Additionally, they are also targeting commercial markets such as healthcare facilities, data centers, and other businesses that require uninterrupted power supply. Generac is also targeting the growing market for renewable energy storage, including those who have solar panels installed on their homes and want to store excess energy for future use.

Industrial Generac generator on pad

The company’s long-term growth prospects, however, still look promising, as changes in the energy, utility, and automotive sectors continue to create a demand for reliable power supply for homes and businesses. The company’s valuation metrics suggest that the stock is overvalued, but a discounted cash flow model estimates a per-share value of $149, indicating a 22% potential upside. The article also mentions the company’s recent slowdown in revenue growth, inflation’s impact on the company’s gross margins, high inventory costs, and high price volatility, which could be a concern for investors. Overall, the company could be an excellent long-term holding if purchased below $100.

The risk/reward for Generac is attractive as long as its EV chargers remain competitive with other available options, and there is sufficient installation capacity.

I don’t feel a lot of pressure to jump in right now but I certainly want them back in the LTP. At the moment, you can sell the GNRC 2024 $100 puts for $25 – that’s a really good price. In fact, let’s sell 10 of those for $25,000 in the STP – just to remind us to keep an eye on them (and to pick up $25,000 in case our hedges don’t pay off). If GNRC goes below $75, we are happy to start building a position in the LTP so, from the STP’s point of view, it’s just $25,000 for free and, from the LTPs point of view, we’re buying 1,000 shares for $75,000 (not including whatever roll we do).

Top Trade Alert – March 21 2023 – New York Community Bank (NYCB)


NYCB was $6 Friday and back to $9 today, which is a $6Bn market cap. They made $650M last year and expected to make $775M this year but they also have $1Bn net of debt and $86Bn under management, up from $57Bn last year.

Then this happened (from SBNY):


When everything is said and done, New York Community Bancorp will boast 435 with branches across the markets in which it operates. Of the 40 branches added, 29 are located in New York, with seven others in California. Historically speaking, New York Community Bancorp has focused its footprint largely on parts of the Rust Belt like Ohio, Michigan, Indiana, Arizona, and Wisconsin. It also has a sizable footprint in Florida and, naturally, it has operations in New York and California already. On the loan side of things, the company’s portfolio will grow from $69 billion to nearly $82 billion.

Their dividend is 0.68, which is a whopping 7.5% on $9/share so, for the Dividend Portfolio, let’s add:

    • Buy 3,000 shares of NYCB for $9 ($27,000)
    • Sell 20 NYCB 2025 $7 calls for $2.80 ($5,600)
    • Sell 20 NYCB 2025 $10 puts for $2.50 ($5,000)

That’s net $16,400 on the $21,000 spread (1/3 uncovered) and we’re obligated to buy 2,000 more at $10 ($20,000) which would be net $36,400 on 5,000 or $7.28/share as a worst case. Our dividends will be $2,040/yr so the upside potential at $10 would be $14,000 for 2,000 shares, $10,000 for $1,000 shares and $3,570 in dividends (we missed one) for $27,570 and a $11,170 (68.1%) profit – not bad for our first two years!


In the LTP, we can:

    • Sell 50 NYCB 2025 $10 puts for $2.50 ($12,500)
    • Buy 200 NYCB 2025 $7 calls for $2.80 ($56,000)
    • Sell 200 NYCB 2025 $10 calls for $1.35 ($27,000)

That’s net $16,500 on the $60,000 spread with $43,500 upside potential at $10.

Top Trade Alert – March 8 2023 – Cisco Systems (CSCO)

CSCO March 8 2023.png
CSCO March 8 2023.png

We made a great case for CSCO during the Webinar but we built it in Chat GPT and Bing and Chat GPT is having issues with their history and Bing never saves stuff so take my word for it – and Warren’s:

🤖CSCO has a strong financial position with a low p/e 12.5 and $16.7Bn net CASH!!!

CSCO has demonstrated a commitment to AI with several ongoing AI initiatives, including its acquisition of AppDynamics, which provides real-time monitoring and analytics for application performance. This acquisition has helped CSCO expand its reach in the fast-growing AI market.

Moreover, CSCO is well-positioned to benefit from the increasing demand for cloud-based services and the internet of things (IoT). The company is already a leader in the networking hardware market, and it is expanding its presence in the software and services market as well. As more devices become connected to the internet, the demand for CSCO’s products and services is likely to increase.

Overall, CSCO is a financially sound company with a strong presence in the technology industry, a commitment to AI technology, and an expanding market for its products and services. These factors suggest that CSCO could be an attractive long-term investment opportunity.

CSCO is going to benefit from more traffic due to AI and they have several AI initiatives already ongoing and Warren came up with some other great ideas they could pursue.

So, for the LTP, let’s add:

  • Sell 10 CSCO 2025 $50 puts for $5.90 ($5,900)
  • Buy 20 CSCO 2025 $45 calls for $9.30 ($18,600)
  • Sell 20 CSCO 2025 $60 calls for $2.85 ($5,700)

That’s net $7,000 on the $30,000 spread with $23,000 (328%) upside potential and, of course, we’d love for them to drop 20% so we can DD but I doubt that will happen so we’ll probably have to be content with the $23,000 gain.

CSCO March 8 2023.png

Top Trade Alert – Feb 24 2023 – Sunpower (SPWR)

SPWR Feb 24 2023.png
SPWR Feb 24 2023.png

We reviewed the SPWR Earnings Report and Conference Call with Warren (my AI assistant):  


 🤖 The analysis suggests that SunPower, a home solar company, is increasingly looking like a good value investment option against a current market cap of $2.84 billion and a price-to-sales ratio of 1.6x, given its expected growth of at least 30% for the 2023 fiscal year. The company has reported strong revenue growth of 43% in the fiscal 2022 fourth quarter, beating consensus estimates, and adding 24,000 new customers during the quarter. SunPower’s gross margins have also increased, driven by the continued pass-along of higher input costs to customers with greater pricing power exerted by the company on the back of rising demand. Adjusted EBITDA has also increased, and the company is guiding for adjusted EBITDA per customer to continue to rise for the full year 2023.

The article notes that macroeconomic uncertainty could pose a near-term headwind to an expansion of SunPower’s valuation multiple. However, the author suggests that the company’s growth momentum, driven by new customer adds and the increasing uptake of home solar across the US, is likely to continue. The author is leaning towards starting a position later this year and waiting for a few more quarters of earnings to see whether the current growth momentum is sustained.

Overall, the analysis paints a positive picture of SunPower’s financial performance and growth prospects, suggesting that the company may be an attractive investment opportunity for those interested in the renewable energy sector. However, as with any investment decision, it is important to conduct thorough research and consider all relevant factors before making a decision.

comment imagehttps://seekingalpha.com/article/4578759-sunpower-corporation-spwr-q4-2022-earnings-call-transcript

 🤖 SunPower reported strong financial results for Q4 2022. The CEO, Peter Faricy, highlighted that the company added 23,700 new customers in Q4, which represents a 39% YoY increase. SunPower’s backlog also ended the year strong with 19,000 retrofit customers and another 34,000 customers in the new homes channel. The company reported $36 million of adjusted EBITDA this quarter, a 39% increase versus Q4 of 2021, to finish the year at $95 million. Additionally, the company reported a positive $41 million in business unit cash generation in the quarter, leaving them with $377 million cash on hand heading into 2023. Despite unprecedented supply chain and inflationary challenges, SunPower managed to deliver results for its customers and shareholders. Looking ahead to 2023, the company plans to accelerate its investment in product, digital, and financial platforms to capture market share and create the fastest-growing residential solar company in the world. The company’s CEO believes that the value of residential solar will be buoyed by another strong decade of federal incentives under the Inflation Reduction Act and the likelihood of rising utility bills.

comment image
comment imagecomment image 🤖 The speaker, Guthrie Dundas, is presenting the financial results and guidance for SunPower Corporation. In the fourth quarter of 2022, the company reported $36 million of adjusted EBITDA and $492 million of non-GAAP revenue, representing a 42% year-over-year increase. The company added 23,700 new customers, which is a 39% year-over-year increase. The adjusted non-GAAP gross margin remained above 20%, and adjusted EBITDA per customer before platform investments increased to $2,300 for the quarter and $2,100 for the full year.
SunPower’s balance sheet is healthy, with $377 million of cash on hand and only $48 million of net recourse debt at the end of 2022. The company sold its last remaining 0.5 million shares of Enphase equity for approximately $120 million in January and paid down its entire $425 million convertible debt. The company is initiating 2023 guidance, with adjusted EBITDA projected to be between $125 million and $155 million, driven by 90,000 to 110,000 incremental customers with adjusted EBITDA per customer before platform investments of $2,450 to $2,900.
Platform investment is projected to peak in 2023 as the company reinvests a portion of the significantly higher-than-expected proceeds from the sale of Enphase shares over the past year. The company expects platform investment to continue increasing in future years but to grow below the rate of customer growth, so the rate per customer declines over time. SunPower is on track to achieve its long-term target model goals, which include growing market share versus peers and growing adjusted EBITDA per customer to a range of $3,000 to $4,000.

comment image 🤖 This is a transcript of a Q&A session where Peter Faricy, CEO, discusses the domestic content benefit of the Investment Tax Credit (ITC) and the company’s lease mix. The speaker mentions that the final guidance for the domestic content benefit has not yet been released, but it is expected to be based on the total system cost of the equipment, and the threshold for domestic content is rumored to be 40%. The company is excited about the benefit, which may provide opportunities for the growth of US clean energy jobs. The speaker also anticipates that lease will be even more attractive as the IRA benefits get defined and expects lease to accelerate beyond 55%. The company’s financing mix is roughly 20% cash and 80% financing. As the IRA benefits are clear and at full scale, the mix may become closer to 50/50.

comment image 🤖 The analyst asked questions about the company’s plans to handle tax credits and financing options for their products. The management responded by stating that they need more clarity from the Department of Treasury before they can act upon the tax credits, and they are confident in their ability to bring in additional partners across the capital stack should they need them. They are evaluating various ways to monetize their lease business, including securitization. In terms of EBITDA, the management expects heavy investment years in 2022 and 2023, with more business leverage in 2024 and 2025. The company grew EBITDA at 26% last year, and the midpoint of their guidance this year is 47% growth. The company expects a similar EBITDA pattern to last year, with 25% in the first half and 75% in the second half.

comment image
comment image 🤖 In the Q&A, Faricy discusses the growth of the company’s business in the Northeast part of the US and the impact of high utility prices on customer demand for solar energy. He also talks about the company’s approach to labor shortages, emphasizing the importance of safety and its mission to make a positive difference in the world. Faricy also addresses a question about the risk of customers being “stolen” by other installers and affirms his expectation that customers who sign up with SunPower will remain with the company.

comment imagecomment image

You can see why this is my Stock of the Decade! We’re just getting started and they are gathering momentum.

Remember, Stock of the Decade was the stock most likely to make 10x in 10 years. That was from $5 so they already did it but we started again in the Future is Now Portfolio back in October, when they came back to $15, then $25 and now $14.27 again.

They are only going to make about $55M this year and $14.28 is $2.6Bn so 47x is not that sexy but only $1.7Bn in revenues (from $1.1Bn last year) means just one good contract (with all that stimulus) can add 30% to that easily and people will pile in – I don’t want to miss that.

In the Future is Now Portfolio, we have the 2025 $15/30 bull call spread which is now net $3 on the $15 spread and we offset that with half as many 2025 $20 puts, which are now $7.85 so it’s a net credit of $1.85 per $30 worth of longs – I love that!

Going in from scratch, I would still go with the $20 puts as I’m very confident in that target so, for the LTP, let’s add the following:

  • Sell 30 SPWR 2025 $20 puts for $7.85 ($23,550)
  • Buy 75 SPWR 2025 $10 calls for $7.20 ($54,000)
  • Sell 75 SPWR 2025 $25 calls for $2.50 ($18,750)

That’s net $11,700 on the $112,500 spread so we have $100,800 (861%) of upside potential (and we are $32,000 in the money to start!) and our worst case is owning 3,000 shares of our Stock of the Decade for net $23.90 ($71,700) but let’s say they are at $7 (down 50%), then we buy 6,000 more for $7 ($42,000) and then we have 9,000 shares for $113,700 and that’s $12.60/share. If you don’t mind owning 9,000 shares of SPWR for $12.60 – then why not?


In our Earnings Portfolio, same spread but different amounts:

  • Sell 20 SPWR 2025 $20 puts for $7.85 ($15,700)
  • Buy 40 SPWR 2025 $10 calls for $7.20 ($28,800)
  • Sell 40 SPWR 2025 $25 calls for $2.50 ($10,000)

This is just net $3,100 on the $60,000 spread with $56,900 (1,835%) upside potential and now we’re only in for net $21.55 if we get assigned 2,000 shares and, in the smaller portfolio, we’d be more likely to roll out of trouble but we still don’t mind owning them if push comes to shove.

SPWR Feb 24 2023.png


Top Trade Alert – Feb 23 2023 – Yeti Holdings (YETI)

YETI Feb 23 2023

Our Stock of the Year, YETI, is off to a poor start with earnings disappointment that has dropped them back to $35 pre-market.  That’s well below our $40.85 entry on 12/3 so it’s a great time to jump in because the miss was due to a $38.4M recall in Q4 and,  outside of that one-time issue, sales and profits were pretty much in-line with expectations.  Adjusted 2023 earnings expectations are $2.12-2.23/share.  

YETI Feb 23 2023

For the Earnings Portfolio, we can start a new spread:

  • Sell 10 YETI 2025 $35 puts at $7.50 ($7,500)
  • Buy 20 YETI 2025 $30 calls at $14.20 ($28,400)
  • Sell 20 YETI 2025 $45 calls for $ 9.50 ($19,000)

That’s net $1,900 on the $30,000 spread with $28,100 (1,473%) upside potential back at $45 and we’re $8 ($16,000) in the money to start.

Remember, we’re bullish so we want to grab the $30 calls and we can wait a bit on selling the $45s to get a better price. As noted above, this is the 2nd 20% sell-off on the same news. Exactly the kind of over-reaction we look to jump on in the Earnings Portfolio.



Top Trade Alert – Feb 9 2023 – UNG

LNG Cycle

Natural Gas Chart HourlyWe are still long on Natural Gas (/NG), of course but now we’re playing the April (/NGJ23) contracts at $2.45, which they are back to this morning.  Those contracts came down 0.25 ($2,500 per contract) since early yesterday morning so we’re expecting a nice bounce today.  

For the longer-run, there are 264 Regasification Terminals proposed or completed in the World.  79 of the open receiving terminals and 57 of the planned receiving terminals are in Asia and 42 open and 32 planned are in Europe – that’s 210.  There are only 139 Liquefaction Terminals proposed or completed and Africa has 16 in operation, Asia 19, Central/South America 4, Europe 3, Middle East 14 and US has 9 – and one of them has been down for a month.  

LNG Export Terminals - Feb 9 2023

That’s why /NG is so cheap at the moment – a combination of a mild winter and 10% of our exports off-line is causing a surplus in the US but notice that 33 new export terminals are planned, 6 more are proposed and 10 are already under construction – which will double our export capacity over the next two years.  By the end of this year, exports are expected to be up 50% over last year.  

That’s why /NG was speculated all the way up to $9 early last year but the reality of how long it takes to build and permit the terminals (/NG is kind of explosive) along with the pipeline issues began to cool off the speculators and then Freeport LNG in Texas shut down due to an explosion in June, which meant that all the gas that was set for export was now flooding the US markets.  Freeport expects to restart in March.  

NG Feb 9 2023

When Freeport comes back online (along with some new terminals), our exports will skyrocket and /NG prices should begin to climb.  As you can see from the series below, production has been steadily ramping up to keep up with export demand but then we had the sharp drop in exports that did not affect production so – SURPLUS!  

NG2 Feb 9 2023

We are not, however, that far up in our storage range and things should be back to “normal” by summer, which is only 4 months from now.  That means, in addition to playing the Futures long, we like the Natural Gas ETF (UNG), which we already have in our Short-Term Portfolio (STP) as:  

UNG Feb 9 2023

It’s less than what we paid now with a net $10,300 credit on the entry for this $50,000 spread.  Given the drop though, as a new trade idea, I would rather go with a lower spread:  

    • Buy 100 UNG 2025 $5 calls at $4.70 ($47,000)
    • Sell 100 UNG 2025 $10 calls at $3.20 ($32,000) 
    • Sell 30 UNG 2025 $10 puts at $4.10 ($12,300) 

That is net $2,700 on the $50,000 spread and there’s $47,300 (1,751%) upside potential if UNG gets back over $10 into early 2025 – when more and more terminals will come online.  Notice in the above chart, production since 2020 is only up 20%.  That means it’s very likely that demand will exceed supply in 2025. 

In our STP, we are going to spend net $1.52 ($15,200) to roll our 2025 $10 calls to the $5 calls, which doubles the upside potential but, even at $10, we started with a $2,000 credit so we end up in that spread for net $13,200 and we’d make $36,800 (278%) at $10 and another $50,000 if we hit $15 – that’s not bad for a fallback plan, is it?  

LNG Cycle

Why do we care so much about Natural Gas today?  Because it’s cheap!  When something gets cheaper than it should be, we check our Fundamentals and, if our premise holds up (we think $4-5 is the natural range for /NG, long-term), we then look for the best ways to invest  

Top Trade Alert – Jan 27 2023 – Sunpower (SPWR)


SPWR has been picked here before but it’s cheap again and it’s also our Stock of the Decade (stock most likely to return 10x) – and the decade is still young. 

We started playing them at $5 so you’ve missed the first 200% gain but still a long way to go at $16.70 – $25 will only be halfway to goal for us:  

SPWR Jan 27 2023.png

  • Sell 10 SPWR 2025 $20 puts for $7 ($7,000)
  • Buy 20 SPWR 2025 $10 calls for $9.20 ($18,400)
  • Sell 20 SPWR 2025 $20 calls for $4.85 ($9,700)

That’s net $1,700 on the $20,000 spread with $18,300 (1,076%) upside potential at $20. We’re aggressive on the short puts but $20 is not very far away. Revenue growth is around 20% and solar is booming and SPWR is small enough were a few big contracts will really move the needle.