Hey Income Aficionados,

Each week, I join the rest of the Option Pit team for the Ticker Highlight Show – a completely free session where we break down our top and bottom stock picks of the week.

Then we build a simple, directional options trade you can use right away – again, totally free.

Before this week’s show – which is on Tuesday, not Monday – I want to give you a sneak peek: the stock I’m loving right now… and the one I think is in trouble.

My Bullish Pick: RKT

Rocket Companies Inc (Ticker: RKT) has made all the right moves in a soft real-estate market. And thanks to that they now control the entire home-ownership funnel, positioning them to thrive as mortgage rates fall and America’s frozen housing market finally thaws. Powell is about to pivot.  Not in July, but it’s coming.

RKT’s $1.75 billion acquisition of Redfin brings the internet’s most-visited real-estate portal in-house, letting Rocket capture consumers at the dreaming stage and feed them directly to Rocket Homes agents and Rocket Mortgage’s instant-approval engine. Boom, ecosystem.

Layer in Rocket Money’s 6-million-user personal-finance app and the company owns the data, the relationship and the cross-sell opportunities from first search to final payment. All of this flows through Rocket Logic, a proprietary gen-AI platform trained on 50 million call transcripts and petabytes of borrower and property data; it automates 70 percent of document review, cuts cycle times by a third, surfaces pre-qualified refi leads and underwrites cash-offer approvals in minutes. 

Did I say AI? Yes. The magic word.  

Vertical integration plus automation means lower client-acquisition costs, richer margins and a customer lifetime value competitors can’t match. When lower rates unlock a backlog of move-up buyers and refi candidates, Rocket’s end-to-end, AI-supercharged ecosystem will be able to onboard, fund, service and recapture business at hyperscale, pumping its fortunes while traditional lenders scramble to rehire and rebuild share. And because every step runs on the same data spine, Rocket can personalize offers, price risk precisely, and funnel savings back into marketing, widening its moat as the undisputed mortgage leader.

I own it and I’m adding on strength.

My Bearish Pick: SPX Puts

This market is LIT (my son taught me that term but doesn’t like me using it!). I’ve been talking about MELT-UP for weeks and here we are.

My bearish pick for a little while longer is the S&P 500 (Ticker: SPX) out-of-the-money puts. I say continue to sell that steep skew for another month.  What does steep mean?  Investors are likely buying stock and calls and hedging with downside put protection.   They’re not bearish but they want something to protect the downside and that is pushing up the relative value of puts. 

To me that is an opportunity.  While this run has been strong, I would continue to sell that expensive “downside” for income.

Will one of these become our FREE trade at next week’s show? Join at 10 a.m. ET on Tuesday to find out!

Add it to your calendar here.

May the income be with you, 

Hans