A Supreme Court Decision Rarely Moves a Stock

Andrew Giovinazzi

Yo Pit Crazies,

One thing Mark and I covered last week was every Bull Market has a story. That’s my secret to trading long gamma-style trades – there has to be a story. When I buy options in individual names, I want a backstory so the stock has a potential to fly.

Below I’m looking at SOFI Technologies Inc (Ticker: SOFI) in my Edge Hunter VBS sheet. What it’s showing me is potential.

After I explain what this Edge Hunter sheet does, you’ll never look at a stock the same way again.

Learn to Trade for Expected Value

When I put a trade on, I want a positive expected value. All that means is this – if the present conditions persist, my trade will make money. I want to know that before I put on the trade. If something odd happens I can hedge, but I still have an opinion to win.

That means your trades should have two key parts – an edge and your opinion. My opinion can be wrong and I still have a chance to be right.

The VBS, Vol Buy Sell sheet, helps identify when options can be held for a period of time with a positive expected value, regardless of direction.

SOFI is due to gain big if the Supreme Court strikes down the Student Loan Forgiveness program – that’s the story. If they don’t, it won’t be good for SOFI or taxpayers since they will be on the hook to pay, and SOFI has less debt to refinance.

I own some SOFI strangles, long calls and puts, in the 8/9 strikes. I expect some fireworks by the 4th of July.

Right now, SOFI options are looking relatively inexpensive on a 4 to 5 day hold. With the potential story, they look even cheaper.

The Rundown

Trading Desk

SPDR S&P 500 Trust ETF (Ticker: SPY), VIX, Ipath Series B short term VIX futures ETN (Ticker: VXX) 6/16,6/21,6/23,7/21 426/432 strangle, 436 call, 15 put, 26 put closed for a 22% gain

Power Income Trader

SPY Jun30 437/430/423 put butterfly closed for a 106% gain

Walt Disney Corp (Ticker: DIS) Jul21 89/91 call vertical spread closed for a 25% gain

Make the Call

Cummins Engine Inc (Ticker: CMI) Jul21 230/240/250 call butterfly closed for a 55% gain

To Your Trading Success,