Top Trades for Tue, 18 Jan 2022 10:30 – CRSP

Good morning!  

Remember last week we only bought the 2024 Russell spread SO WE COULD CASH OUT THE 2023 $20s – never forget why you are in a position…  

If we consider that the Russell tends to move in 800-point major cycles, then 800, 1,600 and 2,400 are our major lines.  There was no consolidation at 2,000 so really this is about a run from 1,600 to 2,400 and that 800-point run means 160-point pullbacks to 2,240 (weak retrace) and 2,080 (strong retrace) – so we expect a bit of a bounce around here/  If not, we'll be scrambling to get more aggressive on the TZA hedge as 2,000 won't be any support and then we're looking at the weak bounce of 1,760 and strong bounce at 1,920 as the next proper supports.   

MSFT buying ATVI for $70Bn is amazing.  That's about $90/share – back to the undeserved highs.   Lots of gaming users is a good get for MSTF and ATVI does have a $3Bn/annual recurring revenue stream and, with MSFT trading at 35x – that's worth $105Bn to them.  Of course, I think the 35x is too much but even at a reasonable 25x – this is a good get for MSFT.

That does NOT (Pharm) translate into RBLX, who LOSE $400M/yr being worth anything near their $45Bn price-tag at $80.  No thanks.

SQQQ/Jij – It's a reverse split so the brokers should be reassigning the options.  Yes I would roll when it's worth it but not if it isn't.  Like the 2023 $25 calls are now $12/17, which is crazy wide but better than the 0.47 they were showing pre-market.  Just make some really good offers that favor you and see if anything fills.  

CRSP/Rn – $5.1Bn is probably a great deal for CRSP but, of course, they are still essentially pre-profit and pretty much pre-revenue too.  This is the technology that will give us spider powers though – and who doesn't want those?  They've got lots of cash ($2.5Bn), no debt and game-changing technology so worth a long-term toss and back on sale at $66.6 is definitely some sort of sign….   

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Top Trades for Thu, 13 Jan 2022 09:01 – MRNA

From this morning's PSW Report:

Moderna, MRNA, has fallen more than 50% below it's peak and yes, it's peak was silly, but $222/share is $90Bn in market cap for a company that will make $11.5Bn in profits this year.  It's being sold off because people think it's a one-trick pony but the Covid vaccine was more of a proof of concept for their process and they now have $22Bn (2 year's profits) to play with in the R&D department:

The thing about the mishandling of the pandemic is that we gave the virus a chance to spead so widely that it is now ENDEMIC, like the flu – and we're never going to be completely rid of it.  That means MRNA will make money for many years to come on covid vaccines so, even if they are a one-trick pony, that trick may last a lifetime.  Still, they have a robust pipeline – as noted in their recent report:

We have been waiting for MRNA to bottom out so we could get back in (we sold our old position near the top) and we discussed making a move in yesterday's Live Trading Webinar (replay available here).  We sold 5 of the 2024 $200 puts for $25 and they are now $50 so we're down 100% on those but our net entry is $175 and MRNA is at $222 so it's only a loss on paper – we intend to stick it out.  As a full trade…
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Top Trades for Tue, 04 Jan 2022 13:17 – VIAC

VIAC/Batman – That's what I was saying – at this price, they are going to get bought.

At $33.08, VIAC's 0.96 dividend is 3.2%, that's not bad.   Still, it's only collecting $2 over 2 years and you can sell the 2024 $30 puts for $5 to net in for $25, which would make the dividend 3.8% so let's consider that $5 to be totally free money, as the worst case would be owning 500 shares for $15,000.  In that case, a spread would be:

  • Sell 5 VIAC 2024 $30 puts for $5 ($2,500)
  • Buy 10 VIAC 2024 $25 calls for $11.60 ($11,600) 
  • Sell 10 VIAC 2024 $30 calls for $8.80 ($8,800)

That's net $300 on the $5,000 spread so, rather than spending $16,500 on 500 shares of VIAC at $33, you obligate yourself to buy 500 shares at $15,300 and at $30, you make $4,700 as opposed to losing $1,500 and collecting $1,000 in dividends. Of course, the real competition would be a stock spread like:

  • Buy 500 VIAC at $33 ($16,500)
  • Sell 5 VIAC 2024 $30 calls for $8.80 ($4,400)
  • Sell 5 VIAC 2024 $30 puts for $5 ($2,500) 

So here you have net $9,600 invested and you'll collect $1,000 in dividends and, if called away at $30 ($15,000), you will make $5,400 more.  So the stock trade is better if you don't mind obligating yourself to DD at $30, which would put you in (less dividends) 1,000 shares at $24,600, which is $8,400 (25%) below the current price – as your worst case.  

So both are good ways to play, more a matter of preference.  For me, in a PM account, I'd rather commit to 2x the options without using the cash.  

BofA's top 10 Q1 ideas gather precision picks for a volatile quarter

ViacomCBS Inc. (VIAC) Presents at UBS 2021 Global TMT Virtual Conference (Transcript)

ViacomCBS: Buy The Streaming, Get The Legacy Business As A Gift

Top Trades for Wed, 01 Dec 2021 12:52 – VIAC, INTC, MO, WBA and IBM (again)

Top Trades for Wed, 13 Oct 2021 09:16 – BYD, GOLD, HPQ, PFE, SPWR & VIAC

Top Trades for Mon, 29 Mar 2021

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Top Trades for Mon, 13 Dec 2021 10:21 – GPRO

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Top Trades for Wed, 08 Dec 2021 10:23 – THO

THO +1.80%
Dec. 08, 2021 9:51 AM ET

  • Thor Industries (THO +0.6%) after reporting an earnings beat and 55.5% revenue growth driven by higher sales in North America following recent acquisitions.
  • By segment: North American Towable RV segment (+61%); North American Motorized RV segment (+87%); European RV segment (+5%). The addition of Tiffin Group accounted for 47% of the increase in increase in North American Motorized RV net sales.
  • Consolidated gross profit margin increased 170 bps to 16.6% primarily driven by the increase in net sales, a reduction in sales discounts since the prior-year period and selective net selling price increases.
  • "It seems the market focuses on the supply chain and labor challenges that our industry is facing right now more than it does our performance in the face of those challenges, but our performance has been consistent despite those challenges," commented CEO Bob Martin.
  • The company's 88,100 RV deliveries outpaced the RV industry's growth rate of shipments. Global order backlog increased to more than $18B, reaffirming Thor's view that the dealer restocking process could possibly extend into calendar 2023.
  • Read what Thor's outlook for the full 2022 fiscal year here.

There's a hidden gem.  THO is in a pretty good trend as people are using RV's to live in.  They are on a great growth path and $720M in profits is over 10% of their $6Bn market cap at $106.  They are super-attractive over the option prices too so, for the Future is Now Portfolio (where no one can afford a proper home anymore), let's:

  • Sell 5 THO 2024 $100 puts for $22 ($11,000)
  • Buy 10 THO 2024 $100 calls for $30 ($30,000)
  • Sell 10 THO 2024 $130 calls for $17.50 ($17,500)

That's net $1,500 on the $30,000 spread that's $8,500 in the money to start.  Upside potential at $130 is $28,500 (1,900%) and the worst case is owning 500 shares at net $103.  






Top Trades for Thu, 02 Dec 2021 15:57 – CLF

Old favorite:

CLF +2.29%Dec. 02, 2021 3:15 PM ET15 Comments


Let's make them a new favorite again in the LTP as $20 is still under $10Bn in market cap and last year they lost $122M but the last 4Qs have been $256M, $288M, $1,197M and $1,775M so back on a path for a solid $3Bn+ which makes $10Bn a no-brainer for our LTP:

  • Sell 20 CLF 2024 $20 puts for $6 ($12,000) 
  • Buy 50 CLF 2024 $15 calls for $8.75 ($43,750) 
  • Sell 50 CLF 2024 $22 calls for $5.75 ($28,750) 

That is net $3,000 on the $35,000 spread that's $25,000 in the money to start with $32,000 (1,066%) upside potential at $22.  Worst case is we own 2,000 shares at net $21.50 – 7.5% above the current price.  

Top Trades for Thu, 02 Dec 2021 11:54 – TD

I love TD:

TD -0.46%Dec. 02, 2021 6:46 AM ET5 Comments

$74.50 is $130Bn and these guys are making $14Bn a year and made $12Bn last year so rock-steady income stream.  They have long-term options now and only a 3.5% dividend ($2.55), so not worth owning the stock but, for the LTP, let's:

  • Sell 10 TD 2024 $70 puts for $8.50 ($8,500) 
  • Buy 25 TD 2024 $60 calls for $15 ($37,500) 
  • Sell 25 TD 2024 $75 calls for $7.50 ($18,750) 
  • Sell 5 TD April $75 calls for $3 ($1,500) 

That's net $8,750 on the $37,500 spread so we have $28,750 of upside potential where we are now and we have 7 more quarters to sell calls as well to knock down the basis.  Our risk is owning 1,000 shares at net $68.75 – and we'd be happy to do that anyway

Top Trades for Wed, 01 Dec 2021 12:52 – VIAC, INTC, MO, WBA and IBM (again)

We had a busy morning as we announced our 2022 Trade of the Year (officially) as IBM.  

In setting up the trade for the Money Talk show tonight (7pm, BNN), I came up with a more conservative strategy that still has kick-ass returns.  While reviewing our Money Talk Portfolio, we had several more trade ideas that are all Top Trade worthy.  

I know it's annoying that sometimes we don't put out Top Trade Alerts for weeks but, when the market gives us a sale, THEN we have plenty to talk about:

VIAC – I am as dumbfounded as to how cheap Viacom is as I was about HPQ last quarter.  You would think they are going bankrupt but no, they are making $2.5Bn a year yet, at $31, you can buy the whole company for $20Bn – and I predict someone will.  When that happens, we collect sooner so we're going to close the current spread for a net $5,300 loss and add back the following:

  • Sell 10 VIAC 2024 $30 puts for $6 ($6,000)
  • Buy 40 VIAC 2024 $25 calls for $10 ($40,000) 
  • Sell 40 VIAC 2024 $40 calls for $5 ($20,000) 

That's net $14,000 on the $60,000 spread that's $24,000 in the money to start and, if VIAC gets bought for $40+, we will get a quick cash out on our spread

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Top Trades for Tue, 30 Nov 2021 14:43 – IBM

So, out of our Trade of the Year finalists, INTC, IBM and GOLD have all held up pretty well the last few days – that's a good sign.  

I think, as an overall trade (with great spread dynamics), INTC is the winner but it's really a two-year play due to their current investment cycle and profits will be off 1/3 this year so Q/Q comps will suck and traders are stupid so there's still a chance they trade lower – even if undeserved.  

IBM, I think, is going to show positive trends in 2022 so the catalyst is better earnings off a stupidly cheap floor.  IBM hasn't spend more than a few weeks below $110 since 2010 as that's about their 11x line.  Generally IBM is more like $120-140 and we can make a conservative spread there I can be very happy with.

In the MTP, we already have GOLD, SPWR and VIAC.  I'd go with T if not for the split (too complicated) so MO and WBA I guess are the other runner-ups.  WBA made $457M last year and MO made $4.5Bn (people gotta smoke) and let's not forget their earnings were depressed due to that JUUL disaster ($12.8Bn down the drain) they stepped into.  If pot is fully legalized, they will take over that industry too and they already own 45% of CRON, which they bought for $1.8Bn and they are down about 50% on that.  

I guess WBA is not as safe as MO but they only just started doing vaccinations and that will be a huge business in 2022 and was our original reason for liking them long-term, as is their 10x valuation.  

So I guess all 4 will be additions, just in varying degrees but IBM will end up being the Trade of the Year as it's the safest bet with the best chance of success.  

IBM – Another former Stock of the Year.  Also approaching 10x earnings at $115, which is just over $100Bn in market cap and IBM is good for about $9Bn/yr in earnings but they also have

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Top Trades for Mon, 29 Nov 2021 11:42 – BNTX and DAL

Two Trade Ideas from this morning's PSW Report:

BioNTech (who co-developed the PFE vaccine) is a similar company to MRNA and it's also popping, Yodi had the idea back on Nov 2nd and we turned it into a trade in our Live Member chat Room:

BNTX/Yodi – Hard to say whether or not they are a one-trick pony but one trick is all they need as we'll be getting Covid vaccines every year, it looks like.  They are not wasting this opportunity and are developing 20 more vaccines with potential to launch over the next 5 years.  They are also working on cancer therapies – obviously huge money IF they can get a winner.   Overall, BNTX is as likely as MRNA to succeed over the long haul and MRNA has a $136Bn valuation on $20Bn in sales with $12Bn in profit while BNTX gets less respect with a $66Bn valuation, $16Bn in sales and $9Bn in profits.  Since their burn rate in 2019 was only $279M, their cash ($8.5Bn) with another $18Bn coming means they will be able to work on whatever they want for quite a long time.   

So I think Yodi has found a worthwhile investment but, unfortunately, it's a pricey stock so it only fits in our LTP at $283.50.  In the LTP, let's:

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Watch here:

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Screenshots of TD's slides illustrating Phil's examples:




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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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