The Sun for a Logo

Hey Influence Traders,

It’s Weekly Roundup time!

The big news?

My youngest graduated 8th grade.

Also, there was a massive Bitcoin conference in Miami, with lots of #PowerMovers in attendance.

Look for my writeup on the event this week — a true homage to Bitcoin.

The Highlights

      • Delegates at the G7 meeting come out swinging on corporate taxes
      • Infrastructure deal proving elusive — but not out of reach
      • A Bitcoin power debate between two heavyweights
      • BP (Ticker: BP) makes a #PowerMove

DC Action

      • Global Taxes: The U.S. is backing a plan by the G7 nations to set a global minimum corporate tax rate of at least 15%.

      • Infrastructure Counter to the Counter to the Counterproposal: The Biden administration keeps cutting and the Republican leadership keeps raising in the hopes of reaching an infrastructure compromise.

Biden put forth concessions to try and secure a $1 trillion infrastructure deal this week, and has now cut more than $1 trillion from his initial $2.3 trillion infrastructure proposal.

Meanwhile, the Republican leadership raised the GOP’s offer by $50 billion, which puts it just under $1 trillion.

The deal is not done, but it is certainly not dead as some had previously reported. This week will be pivotal.

      • Crypto Taxes: Financial Crimes Enforcement Network (FinCEN), which is part of the US Treasury Department, is amending its reporting form to cover one or more accounts held outside the US if the aggregate amount exceeds $10,000, which will cover crypto accounts.

Power Moves Portfolio Roundup

The Power Moves Starting Lineup continues to make waves:

Trading guru Andrew Giovinnazi caught and bought the BUG … four Global X CyberSecurity ETF (Ticker: BUG) Sept. 17 28-strike calls for $1.25.  The stock is illiquid, but the IV in the calls is cheap, so this was our best way to play the Ransomware story.

Ford Motor Co. (Ticker: F) is moving out and we sold out three of five of the call part of the trade at $1.06. The trade is semi-mirroring the ratio AG has in the Trading Legion. Up 33% on the first leg and 88% on the second.

General Electric Company (Ticker: GE) is a play on green energy. We own two GE Sept. 17 14-strike calls for a credit.

Cleveland Cliffs (Ticker: CLF) broke out and way above the strike in our spread, so AG took the $100 gain and bought a midterm call, on CLF Jul16 21 calls for $1.61. Looking for a double in this call to close.

We sold three Taiwan Semiconductor (Ticker: TSM) June 18 120-strike calls at $2.31 on Friday, just because we were running out of time and the position was about even with the QQQ puts. The crazy thing is, of course, that TSM looks crazy strong, so AG bought two TSM July 21 125-strike calls for $2.51. Targeting a double on those calls and we still own the June 18 100-strike put too. 

Palantir (Ticker: PLTR) stock is trading over $24. Since the net position was up around 8%, AG sold the stock and moved into cheaper calls. He  bought five PLTR July 18 26-strike calls for $1.18.

Power Mover of the Week

The nominees …

      • Essential Quality: Made a #PowerMove down the back stretch to beat out Hot Rod Charlie for a win at the Belmont. He paid $4.60 on a $2 bet to win.

      • Susan Rice: One of Washington’s true power-brokering insiders, Susan Rice, who is the head of the Domestic Policy Council and a former Obama confidant, invested $5 million in Canadian Pipeline company Enbridge Inc. (Ticker: ENB).

ENB is a multinational pipeline company headquartered in Calgary, Alberta. It focuses on the transportation of crude oil and liquid hydrocarbons, primarily in North America. Enbridge has been in a dispute with the state of Michigan over a pipeline that has caused its stock price to flatline.

Does Susan know something that we don’t?

      • U.S. Jobs: The U.S. added 559,000 jobs in May and the unemployment rate fell to 5.8%, the first time it has dropped below 6% since the pandemic started.

However, employers still report having trouble finding applicants, despite millions remaining on the jobless.

      • Nuclear Power: Wyoming is a making a nuclear #PowerMove with the help of two financial titans.

While nuclear is not center stage for a lot of climate activists, it has its supporters who know that addressing their climate change concerns will require greater use of nuclear power plants, in addition to wind and solar energy sources.

Recently, Nuclear Fuel Services, Inc., a subsidiary of Lynchburg, Va.-headquartered BWX Technologies (Ticker: BWXT), was awarded a $57.5 million contract from the National Nuclear Security Administration (NNSA) to convert natural or depleted uranium (DU) to purified highly enriched uranium (HEU) metal.

This week, Wyoming Gov. Mark Gordon announced that a next-generation nuclear power plant will be built at a soon-to-be-retired coal-fired plant in Wyoming. The project is a joint venture between two financial titans, Bill Gate’s TerraPower and Warren Buffett’s Berkshire Hathaway-owned PacifiCorp. The project will feature a 345-megawatt sodium-cooled fast reactor with a molten salt-based energy storage system, which would produce enough power for roughly 250,000 homes.

But my Power Mover of the Week is … Solar

There are numerous bills and executive orders circulating around D.C. that promote green energy spending and reduced tax benefits for fossil fuel companies. Some fossil fuel companies see the writing on the wall.

Power Loser of the Week

      • BTC Power Consumption – When Elon Musk announced that Tesla (Ticker: TSLA) would no longer take Bitcoin as payment for its electric vehicles because he is “concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel,” he launched a debate over BTC’s energy consumption.

Ark Investment scion Cathie Wood, who went heavily into BTC, counters that Musk is wrong. She cites separate studies that claim that between 39% to 73% of BTC power consumption is from renewable sources.

The debate rages on!

      • College Basketball: Duke’s Coach K announced that he will retire after the next season, ending an era in college basketball that might never be matched. (YES – I’m a highly biased Duke fan.)

Mike Krzyzewski is the winningest coach in men’s college basketball, with 1,170 total victories. Jon Scheyer, Duke’s associate head coach and one of Krzyzewski’s former players, will succeed Krzyzewski as the team’s first new head coach since 1980.

In my three years at Duke Law, I witnessed back-to-back national championships and a 29-1 post-season record. PURE MAGIC!

      • The Legal Profession: The legal world lost a heavyweight this week when F. Lee Bailey passed away at the age of 87. He represented some of the most famous defendants, from Patti Hearst to O.J. Simpson to the Boston Strangler. But he first gained attention in 1966 when he succeeded in reversing the murder conviction of Dr. Sam Sheppard, the Ohio doctor whose case inspired the television series and movie “The Fugitive.” 

But my Power Loser of the Week has to be … Global Taxes.

Finance leaders from the Group of 7 countries agreed to back a new global minimum tax rate of at least 15% that companies would have to pay regardless of where they locate their headquarters.

The G7 delegates, which represent Britain, Canada, France, Germany, Italy, Japan and the United States, want to stop large multinational companies from seeking out tax havens and force them to pay more of their income to governments.

The agreement could also force large multinational companies, like Amazon (Ticker: AMZN), Facebook (Ticker: FB) and Google (Ticker: GOOGL), to pay taxes to countries based on where their goods or services are sold, regardless of whether they have a physical presence in that nation.

Such moves could definitely impact earnings and companies’ bottom lines.

The next step is for the G7 countries to sell the idea to the G20 nations at their upcoming meeting in Italy.

Not everyone is happy. Ireland, for example, has a 12.5% tax rate and believes that a 15% minimum rate would disrupt its economic model. China has not taken a public position.

But the U.S. is fully behind the idea because it wants to raise its corporate tax rate from 21% to 28% to help pay for Biden’s infrastructure proposal. Treasury Secretary Janet Yellen needs the global rate to go up to minimize the disadvantage she wants to levy on American companies to make it less likely they’ll move operations offshore.

Its Logo is the Sun, After All

Seeing the writing on the wall for fossil fuels, BP (Ticker: BP) just boosted its investment in U.S. renewables with a $220 million purchase of solar projects from developer 7X Energy.

The new assets will be developed and operated through its 50-50 joint venture with BP-owned Lightsource. The 7X business is a nice addition to BP’s U.S. power trading business, which includes onshore wind and natural gas electricity.

BP has plans to reduce carbon emissions by reducing oil output and growing its renewables business 20-fold between 2019 and 2030 to a capacity of 50 gigawatts.

BP is making #PowerMoves and deserves to be in the Power Moves Portfolio Starting Lineup … stay tuned.

Cutting Through the Noise for You, 

Frank

 

They’re Back!

Yo Pit Crazies,

 

I’m back!

 

And as I tried to get back into the swing of things Friday, I laid on the couch contemplating … my creaky back and meme stocks!

 

Too many backs there — but could the markets get back to normal?

 

By the end of the day Friday, the jury had spoken and the VIX was down 1.62 to 16.42, which is nearing a low since COVID started

 

That means something. If you want to find out what, read on!

Remember what the VIX is — a 30-day forward volatility index designed to create a smooth number for volatility and not move unnecessarily.

 

When it does, that’s a signal market sentiment is changing

 

      • A falling VIX number means that future moves will be less than now
      • A rising VIX number means that future moves will be more than now

 

Six-month CBOE S&P 500 9-Day Volatility Index (VIX9D) with one-day candles. Remember VIX is a 30-day number, VIX9D is a 9-day number.

 

What we have, is that in the very-short term, the market hit a new low into the close for volatility.

 

I know it is a weekend, but still, new lows are new lows. New lows in VIX, VIX9D or otherwise, are usually very bullish.

 

My sentiment is reflected in the Power Moves Portfolio below and my Volatility Trading Club trades and Trading Legion ideas — I am thinking of new highs in the S&P 500.

 

I will buy two SPDR S&P 500 ETF Trust (Ticker: SPY) June 18/Jul 02 430-strike calendar markets at $1.35 on the close and keep rolling the 430s. And I will buy one VIX July 21 25-/40-strike at $1.15 as a reasonable hedge, as it takes a long time for VIX calls to evaporate.

 

This most likely will be my VTC trade idea on Monday.

 

I have to believe one of these sides will make big money.  The funny thing is, this trade is positive theta — but also will perform in a big market swing up or down.

 

An Option Pit Pro Trade setup if I ever saw one …

 

The Lesson: A new VIX or VIX9D low is always significant because it signals a change in sentiment for right. Crazy things can always happen, but the forward sentiment change is what the market is telling you.

 

The Rundown

Robinhood Trader:
Option Pit CEO Mark Sebastian uses the Robinhood Radar to find order flow in active names.

      • Mark still has the mojo rolling with the tweaks he made to the Robinhood Radar. 

        • UVXY is the gift that keeps on giving. June 04 26.5-strike puts were bought for $1.60 and closed for $3 and $2. That’s a 50% gain.
        • He is currently long calls in Senseonics Holdings (Ticker: SENS), up 40%, Nokia (Ticker: NOK), up 15%, and back to the well in Blackberry (Ticker: BB).

 

Trading Legion:
The Trading Legion is an intermediate-level education and a long strangle trading vehicle. The goal is to teach students the best times to buy options.

 

Ford (Ticker: F) ripped up Friday, so I closed three of five calls in the F June 18 15.5-/14-strike risk reversal. Looking at a 50% win there on the second leg.

 

I am still riding the Ark Innovation ETF (Ticker: ARKK) strangle with the ARKK Jun 04 116-strike calls going out worthless and looking for ARKK to match last week’s highs.

 

Sharp Bets:
Mark Sebastian runs our marquee long option strategy for a once-per-week trade. SB specializes in low-implied volatility calls and puts, and managing trade size for a risk-adjusted options portfolio.

Mark added a buy of General Electric Co. (Ticker: GE) July 09 14.5-strike calls this week.

 

Pro Trading Room:
This is Option Pit’s live access to Mark and myself during trading hours. Our Pro students post trade ideas with Mark and me during the entire trading session. 

 

The tone was mostly bullish this week into the close.

 

      • Biogen Inc. (Ticker: BIIB) is coming out with their Alzhimers drug results next week.  We have had Pros riding the BIIB Jan. 2022 265-strike calls for quite a bit.  I added the iShares NASDAQ Biotech (Ticker: IBB) July 16 160-strike calls into the close. I figure I can sell puts against them if BIIB news is bad, which I don’t think it will be.

 

The Power Moves Portfolio:
Frank Gregory and I run a portfolio approach to trading options with stocks that have good long-term prospects based on Frank’s K Street knowledge and my options expertise. We are aiming for positive theta trades and using that income to buy calls is the big growth opportunity.

 

We’re up 15% in the Power Moves Portfolio, and we’re allocating $20,000 to the strategy for now. More on that for my Monday Option Pit Exclusive.

 

Here’s the latest …

 

Looking at Coinbase (Ticker: COIN) for this week, but all the meme action is making me wait for an entry.

I caught Frank’s bug and bought four Global X CyberSecurity ETF (Ticker: BUG) Sept. 17 28-strike calls for $1.25.  The stock is illiquid, but the IV in the calls is cheap so thought this was the best way to play the ransomware story.

Ford Motor Co. (Ticker: F) is moving out and I sold out 3 of 5 the call part of my trade at $1.06.  The trade is semi-mirroring the ratio I have in the Trading Legion.  Up 33% on the first leg and 88% on the second.

General Electric Company (Ticker: GE) is a play on green energy. I own two GE Sept. 17 14-strike calls for a credit.

Cleveland Cliffs (Ticker: CLF) broke out and way above the strike in my spread, so I took the $100 gain and bought a midterm call, 1 CLF Jul16 21 calls for $1.61.  Looking for a double in this call to close.

I sold three Taiwan Semiconductor (Ticker: TSM) June 18 120-strike calls at $2.31 on Friday, just because I am running out of time and the position was about even with the QQQ puts. The crazy thing is, of course, that TSM looks crazy strong, so I bought two TSM July 21 125-strike calls for $2.51. Targeting a double on those calls and I still own the June 18 100-strike put too. 

Palantir (Ticker: PLTR) stock is trading over $24. Since the net position was up around 8%, I sold the stock and moved into cheaper calls. I bought five PLTR July 18 26-strike calls for $1.18

Below is the current status and track record of the Power Moves Portfolio …



Volatility Edge/Volatility Trading Club:

The Option Pit VIX Light is still red, and the Cboe S&P 500 9-Day Volatility Index (VIX9D) made COVID-era lows. I am still learning short VIX delta here.

 

Mark created three put trades short, medium and long term for UVXY on Tuesday and so far so good. UVXY closed at a pandemic low on Friday.

 

I was able to close VIX June 16 20-strike puts at $2.80, which gives me trade No. 246 for 7% credit with upside until June 16.

 

Remember, a lot of vol strategies I use are market neutral. That means whether SPX or VIX go up or down, the positions still make money. This is a technique you can learn in the Volatility Trading Club and Volatility Edge!

 

To Your Trading Success,

 

AG