2025 is a year for cheap stocks

BY ANDREW GIOVINAZZI

December 11, 2024

Yo Pit Crazies,

With SPX pulling back a bit into the inflation numbers today and tomorrow I want to make sure everyone understands the opportunity that is in front of us this coming year. Especially in long option trading.

Hannah and I got together in September and presented the Option Fingerprint as a viable way to find stocks that institutions are happy with. So those Fingerprints have produced $5200 on a $25,000 investment, I do all my trades live for real $, not funny money, in 3 months or just a shade over 20%. Not too shabby. And that is just the stock portfolio with the option portion delivering $2500 on $2500 in initial price so just 100% so far. Oh the magic of options.

There are other elements that make the trades really interesting and potentially very lucrative for stocks where traders are not comfortable looking at long term options volumes. I will pull up an example of Newell Brands Inc (Ticker: NWL)

I got in at the big red arrow but it was on the radar for a while.

You would think that would generate massive options buying interest.

Well…?

The Market Underprices Options all the Time

Licia knows where to look. I know where to look because we have been looking at options for 30 years each. Don’t tell Licia I said that. When I look at NWL below with 30 day IV the story is down right silly. NWL does not make computer chips but NWL will do better in a rising economy. Value stocks don’t wake up until the rest of the market is tired of the growth stocks. Implied Volatility (IV) Is dirt cheap there. .40 to .75 options can grow up into big options dang fast. A near $3.00 move in the stock is pretty big next to a .75 option. That should generate 4x returns.