Lawyers – Sharpen Your Pencils!

Hey Influence Traders,

How about some Thursday deep thoughts on the intersection of K-Street and Wall Street?

But first, I need to give a quick shout out to the Tampa Bay Lightning …

The Bolts clinched a Stanley Cup in five games to repeat as champions.

What can I say?

I love winners.

I also love to talk about the White House and the Hill …

After all, that’s where policy is made.

But there is a third branch of government, as you’re probably aware …

And public and private lawsuits are making ripples from K Street to Wall Street.

Specifcially, litigation gunning for Big Tech.

He’s Baaaccckkk!

Former President Trump filed a class-action lawsuit in Florida Federal District Court against Facebook (Ticker: FB), Twitter (Ticker: TWTR) and Alphabet subsidiary Google (Ticker: GOOG) alleging that their suspension of his accounts amounted to unlawful and unconstitutional censorship.

Most K Street legal prognosticators agree that the case has no merit because private companies are not subject to the Constitution, in this case the First Amendment, which is the basis of the complaint. 

If the suit somehow survives summary judgement and is not immediately dismissed, it could raise some interesting questions, namely whether private companies cross the line from private to public if they are seen enforcing the will of one political party.

But it is most likely DOA.

Break’em Up!

A potentially more interesting suit has been brought by a bi-partisan group of attorneys general from 36 states and Washington, D.C., against GOOG.

The suit alleges that GOOG’s app store policy of charging developers a 30% commission on digital content or subscription purchases violates antitrust laws.

Specifically, it is alleged that GOOG shuts-out potential competitors and limits app choices, which artificially drives up prices.  

This is the third antitrust lawsuit filed by states against GOOG

Google leadership described the suit as “strange."

This case comes on the heels of the recent dismissal of another antitrust suit by attorneys general against FB …

However, that case was dismissed because of a procedural error, not the merits.

The suits don’t appear to be having a big impact on the recent tech run and, as I always say, I’d rather own five pieces of a broken up monopoly rather than the monopoly itself.

Suits in Your Favor

The Department of Defense’s recent cancelation of the Joint Enterprise Defense Infrastructure, or JEDI, cloud computing project has been all over the news.

The $10-billion program was awarded in 2019 to Microsoft’s (Ticker: MSFT) Azure platform.

But do you know why it was cancelled?

Because Amazon (Ticker: AMZN) contested the decision in court alleging that former President Trump unduly influenced the award process because of animosity towards Jeff Bezos.

Bad news for MSFT; good news for the B-Man.

The cancellation caused AMZN’s shares to rise, which put Bezos’s net worth over $211 billion, allowing him to surpass Elon Musk as the world’s richest man.

Tesla’s (Ticker: TSLA) Musk is just under the $200 billion mark, so don’t cry him a river.

Who or What Does Paul Know?

One person unphased by the tech lawsuits is House Speaker Nancy’s Pelosi’s husband, Paul, who raised some eyebrows this week with some apparently well timed trades.

According to a July 2 financial disclosure, he made a little over $5 million on GOOG options contracts. 

This announcement raised eyebrows because Nancy Pelosi is leading the debate on a series of antitrust bills targeting Google, Apple (Ticker: AAPL) and Amazon.

Since House and Senate members have been accused in the past of trading on insider information, people took note.

While suspicious, it appears that Paul Pelosi just made some options #PowerMoves. (Maybe he’s a Volatility Edge member!)

On February 27, Pelosi bought 40 GOOG call options at a strike price of $1,200, which were exercised on June 18 and gave him the right to convert into 4,000 Alphabet shares.

At the time of exercise, GOOG was trading around $2,550, so the options were in-the-money and worth about $5.4 million.

The options were set to expire on June 18, the day he exercised, so Paul Pelosi had to either sell them or execute. 

This is not the first time that PP has made some timely bets.

I’m not throwing accusations … just stating facts.

#PowerMoves Portfolio

Option Pit Director of Education — and my Power Moves Portfolio running partner — Andrew Giovinazzi has been making some #powermoves of his own.

      • We closed our Cleveland-Cliffs (Ticker: CLF) July 16 21-strike puts for $.77. 

It was a small gain on those puts and we still own the CLF July 16 16-strike puts from the spreads. 

      • CLF is not holding a bid for any length of time. There will probably be a better reentry point.

      • We added two Coinbase (Ticker: COIN) Aug. 20 250/270/290 call butterflies for $2.55. We’re spending the COIN call spread money to see if the stock can make a move back to the $270-level.

      • Palantir (Ticker: PLTR) is moving back up the list for call buys. Stay tuned.

      • Taiwan Semiconductor (Ticker: TSM) was a Trading Legion idea, but the trade fits our investment thesis, so Andrew is adding it to the Power Moves Portfolio.

He wants the put calendars to pay the decay for his calls as TSM powers up to earnings.

The stock looks poised to break out and the two big semiconductor makers, Advanced Micro Devices (Ticker: AMD) and nVidia Corp (Ticker: NVDA), are showing crazy momentum that should help TSM.

Here’s the idea:

Buy to open two TSM July 23/July 09 116-strike put calendars; pay $1.36. Buy-to-open two TSM July 23 124-strike calls; pay $1.80 … These were filled for $1.35 and $1.75, respectively.

The live updated trade log is here

And look for big Power Moves Portfolio news coming soon …

Cutting Through the Noise for You.

Frank

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