BY ANDREW GIOVINAZZI
April 1st, 2025
Yo Pit Crazies,
So know what stock makes a great Turbo Income Trade? That stock would be Newsmax Inc. (Ticker: NMAX). There is nothing like an income strategy on a stock that goes from $20 to $210 in two days to warm the heart of every income trader.
…..And it is April Fools. If you want the #1 stock to generate income on, check out Hans here. He’ll give it to you for free.
Now you may not know this, but NMAX flying to the moon has nothing to do with the business and everything to do with the float of the stock and the amount of shares available to trade. In the go-go 1990s, it seemed like companies would go public every week to cash in on the internet riches. However, there was often a limited number of shares available for trading, and everyone was eager to get in. So… up goes the stock.
WAY further than it should. Why should you care about NMAX when the whole world is wondering about the terrible tariffs that are in store for our trading partners?
Here’s Why:
How traders are positioning themselves matters.
In the case of NMAX, investors were clearly eager to get a stake in the conservative broadcaster, but there weren’t enough shares available. As a result, demand drove the price up to match the limited supply.
If traders are too short going into the Liberation Tariff Day event, stocks could jump if the news is somewhat less disturbing than expected. Similar to NMAX, stocks could get squeezed higher due to a lack of sellers below the 200-day moving average in the S&P 500 Trust ETF (Ticker: SPY).
Right now, traders are pricing the upside skew at a relatively high level. This means that the 25-delta out-of-the-money call option is trading for about 90% of the volatility of the at-the-money option, whereas typically, that skew would be closer to 75%.
There is a substantial volatility bet on the upside direction following Tuesday evening’s tariff news. Right now, staying long in this market is the more challenging position, and traders are betting that the S&P 500 Trust ETF (Ticker: SPY) will move in that direction once the news is out.
To Your Trading Success,
AG
Andrew Giovinazzi
30-Year Trading Pro
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