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Thursday, March 28, 2024

Top Trades for Mon, 12 Apr 2021 10:38 – VIAC

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Top Trades for Mon, 12 Apr 2021 10:38 – VIAC
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Good morning!

CHL/Seer – You have until November but it seems like a month-long process at least to transfer the ADR so I'd say do that so at least you are semi-liquid and then consider selling.  If Biden reverses the order, this thing could explode higher.  

BABA/Rick – Well he caved but it keeps the company intact, which is great for the shareholders, which includes us in the LTP:

BABA Long Call 2023 20-JAN 250.00 CALL [BABA @ $237.52 $14.21] 15 2/3/2021 (648) $106,500 $71.00 $-26.75 $71.00     $44.25 $8.33 $-40,125 -37.7% $66,375
BABA Short Call 2023 20-JAN 300.00 CALL [BABA @ $237.52 $14.21] -15 2/3/2021 (648) $-78,000 $52.00 $-24.85     $27.15 $5.05 $37,275 47.8% $-40,725
BABA Short Put 2023 20-JAN 200.00 PUT [BABA @ $237.52 $14.21] -5 2/3/2021 (648) $-15,500 $31.00 $-3.95     $27.05 $-4.45 $1,975 12.7% $-13,525

Nice net $13,000 entry on the $75,000 spread.  Still playable at $12,125 as our entry wasn't the best.  

Let's talk Fundamentals.

Our guest today in our 1pm (EST) Live Trading Webinar will be Bill Olsen of Newsware and he's going to show us lots of tricks to get the most out of his platform, which is better than a Bloomberg Terminal for bringing you the headlines before they become headlines.  While I'm mostly a Fundamental, Long-Term Trader, who doesn't like to get a jump on a quick trade because you know something that's not generally known yet?  

As Gordon Gekko said in "Wall Street": "I don't throw darts at a board, I bet on sure things."  Information is power and we're living in the information age but, unfortunately, like everything else, you have to learn to read and filter the news and, while Bill has many pre-set filters you are going to love – you are still going to have to put your 10,000 hours in if you want to get your Gekko on.

Just this morning, for example, the following alert popped up at 6:14:

Ant Said to Reach Agreement with Regulators on Overhaul – Bloomberg
(Street Insider 02/03 06:14:06)

Perhaps that headline by itself isn't helpful but we know that Jack Ma has been out of favor with the Chinese Government and that AliBaba's (BABA) stock price has suffered because of it.  We also know Amazon (AMZN) just knocked it out of the park on earnings so BABA should also do well and that means we BUYBUYBUY on that news.

BABA is already up $10 pre-market at $264 but that's down from $319 in October and the best way to play it is to say we WOULD like to own it for $200, so we can sell 5 2023 $200 puts for $33 (perhaps $30 if we open higher, so call it a $15,000 credit) and then we can buy 15 of the 2023 $250 ($70)/300 ($50) bull call spreads for net $20 ($30,000) in our Long-Term Portfolio (LTP) and that's net $15,000 on the $75,000 spread so there's $60,000 (400%) of upside potential at $300 and, as our Members know, we can look forward to selling short calls like (but NOT YET) 5 March $290s for $5 to collect $2,500 using 44 of the 716 days we have to play.

If we pay net $15,000 for the spread, we only have to sell $2,500 worth of premium every 100 days to more than pay for the whole thing and then we have a free 2023 $250/300 bull call spread on BABA.  Our downside risk is being assigned 500 shares of BABA at net $200 ($100,000) but, fortunately, we already have an FXP spread in our Short-Term Portfolio so we already have a downside hedge on the Chinese market.  That coupled with the fact that we recover our investment making just 1/3 sales against our long position makes me REALLY like this trade idea!  You know who else is liking my trade idea?  Analysts – who are running in like sheep to upgrade BABA this morning – also very easy to find on NewsWatch (part of NewsWare):

INFORMATION – That is how we trade.  We don't need to follow the sheep who run into momentum stocks on Reddit boards.  We can make good money (400% is good money, right?) by simply using the proper tools (which we PRACTICE using until we are experts) and putting in the real work it takes to consistently make money in the market.  

Reading Is Fundamental (RIF) | Brooklyn Public Library

Canada/Tommy – 15% of your population is vaccinated (one dose) and only about 2% have gotten both so far.  

VIAC/Swamp – We were going to add them back in to the LTP, actually.  I imagine you mean the $37 puts (see how hard my job is!) and that's a great spread.  I'm going to be a little more aggressive as we REALLY want to own them in the LTP:

For the LTP, lets:

  • Sell 10 VIAC 2023 $40 puts for $9.30 ($9,300) 
  • Buy 30 VIAC 2023 $40 calls at $10.80 ($32,400) 
  • Sell 20 VIAC 2023 $55 calls for $6.20 ($12,400) 

That's net $10,700 on the $45,000 spread and if VIAC goes higher, we'll probably sell some short-term puts to begin working off that $10,700 (the June $45 calls are $2.90 so 10 fetches $2,900, for example) and, if it goes lower, the June $40 calls are $4.75 and $4,750 pays for most of the $6,000 roll to the June $35 calls ($12.75) and that's how we'll take advantage of further downside so we'd almost rather see it go lower first but, if not – $34,300 (320%) is all we'll get a a consolation over $55.