BY ANDREW GIOVINAZZI
February 26, 2024
Yo Pit Crazies,
Are you into the Trade Zone yet? Do so now while the getting is good.
Stocks are at all time highs and brushed 5100 SPX. AI is all the rage and interest rates for the short term are stable with some Quantitative Tightening (QT). Uncle Sam continues to pump $2 trillion a year into a confab of pet projects from green energy, chips, states and just about anything I can think of except me. Ha!
AI and Nvidia Corp (Ticker: NVDA) are the market favorites and it would not surprise me for the stock to see $1000. $800 is nutty, why not $1000. I only hold NVDA through the Market Sectors Semiconductor Index ETF (Ticker: SMH).
I will likely never sell what I own in my lifetime at this point and only add when there is the inevitable slowdown in Semiconductors.
As an investment I want a more out of favor stock. That stock is below. I am enlisting my friend and colleague Mark Sebastian to help out on this one.
I want to jump into the Zone on this one.
TSLA is leading on many technology fronts
Investing and trading are 2 different things. Mark is in the Trading Zone looking at various butterfly structures to generate better returns on stocks at big numbers. That is what I am doing for Tesla Inc (Ticker: TSLA). TSLA eventually will spin out some of the AI Tech into other companies in my opinion. I want to be along for that ride.
I am buying 3 month butterflies looking for 8x returns if the stock gets to recent highs. If TSLA drops lower I add a put or two to reduce the net delta. I will also add some shares, generally 10 to 20 shares at a pop against my long put. That way if the stock tanks, I will get paid to own the small share blocks. Mark and I cover this technique in the Trading Desk.
So far since I started adding, my TSLA flies are up small but not enough to cover the cost of the hedge yet or shares yet. I did notice a drop in the downside volatility in TSLA last week so I am expecting a lift this week.
If things go great, the flies will pay for all my share costs and I can take a smooth ride in a TSLA.
To Your Trading Success,
-AG
Andrew Giovinazzi
30-Year Trading Pro
See what's hot at option pit
CAPITOL GAINS: SMR Aug16 7 call closed for a 150% gain
DELTA STRIKE: VLY Mar15 8 puts closed for a 88% gain
PFE May17 26 calls closed for a 66% win
OP MENTORING: SPY Mar22/19 510 put calendars and 520 calls for 6.4% gain
OPTION SHOPPER: ERX Mar28 65 calls closed for a 90% gain