The Drug of Choice Glasgow COP26? Lithium

Yo Pit Crazies,

 

For the most part, alt energies (and companies powered by them) did well during the COP26 conference in Glasgow — namely Tesla Inc. (Ticker: TSLA), which enjoyed a 20% increase until Elon Musk said he was selling. 

 

Solid-state battery developer QuantumScape Inc. (Ticker: QS) didn’t fare too badly, either.

 

TSLA isn’t the only car company around and they all need batteries — and the lithium that powers them.

 

Let’s see what the OptionPit Squeeze-o-Meter, aka the EdgeHunter Hard-to-Borrow Sheet, has to say.

 

Also, we’re getting the Capitol Gains gang back together for a no-cost event this Wednesday at 2 p.m. EST. Come for the Congressional Budget Office decision prep, stay for the exclusive “charged up” trade. Register now!

 

QS Goes Through Periods of Short Squeezes

 

Recall that a short squeeze is nothing more than an engineered effort to get short sellers to cover a short stock position.

 

That usually means they have to buy it back in a hurry.

 

That makes the stock go up.

 

 

Recently, I wrote about RobinHood Markets Inc. (Ticker: HOOD), but the data breach news actually pushed the stock down a bit.

 

I closed my HOOD position for a small loss since the stock dropped $4 but the puts only went up .20.

 

That helped keep the loss manageable since the puts collapsed in implied volatiliy after the stock dropped. 

 

That may sound goofy, but that’s how it works.

 

QS is not nearly as severe as HOOD, with QS running at a -4.5% annual borrow rate and HOOD around -50% annualized rate. 

 

However, if you look at the history, the shorts will pile in on QS for a period of time. 

 

Another Lithium advantage is all car producers need batteries and better battery tech. This is a potential squeeze in the making as the QS climbs higher.

 

I do like the December upside butterflies in QS and they are easy to hedge.

 

Questions about this? Hit me with an email.

 

The Rundown

Capitol Gains w/ Frank Gregory
Option Pit DC and Wall Street insider Frank Gregory and I run a portfolio approach to trading options with stocks that have good long-term prospects based on Frank’s K Street knowledge and my options expertise.

 

Regeneron Inc. (REGN) is making a run back to the recent high of $685 on all the bad European news on Covid.

Stocks currently in the CAPITOL GAINS portfolio:

 

      • Regeneron Inc. (Ticker: REGN) long COVID therapies
      • Mandiant Inc. (Ticker: MNDT) long Cybersecurity
      • PetroBras SA (Ticker: PBR) long oil
      • SPDR Oil and Gas Explorers (Ticker: XOP) long oil
      • Intel Corp (Ticker: INTC) long chip shortage
      • Powershares QQQ Trust (Ticker: QQQ) portfolio hedge

 

Power Income Trader:

Power Income Trader is a systematic approach to trading inflation.  By pulling real-time data from the Fed, US Treasury and Gov’t, Power Income Trader alerts users on changes in money flow driven by Fed policy. Bill’s system puts you out in front of the most powerful money flow in the world.

 

Bill is smokin with a new long in GrowGeneration Corp. (Ticker: GRWG) and closed it with a 9% winsky.

 

6 month GRWG chart with 1 day candles

 

His Power Income letter still bringing the bacon, too. THREE big closes yesterday:

      • STC 3/3 $GDX DEC17 35/36 CS at .40 +74%
      • STC 1/3 $KGC May22 6/7 CS at .54 + 145%
      • STC 10/10 $SLV DEC17 24/24.5 CS at .13 +63%

 

Pro Trading Room:
The Pro Room is Option Pit’s live access to Mark and myself during trading hours. Our Pro students post trade ideas with Mark and me during the entire trading session. 

 

Ken A., on a hot streak lately, opened a small risk reversal in Pinterest Inc. (Ticker: PINS) on Friday. It was up nicely yesterday.

 

Cheap vol in Qualcomm Inc (QCOM) got some looks:

 

 

Robinhood Trader:
Option Pit CEO Mark Sebastian uses the Robinhood Gamma Radar to find order flow in active MEME  names.

      • Mark is riding some Palantir (Ticker: PLTR) calls with the Trading Legion with stock holding here. Both trades are making money, up about 20%.
      • I closed theTurbo Trade QS Nov16 40/50/60 call butterflies for a 60%+ gain yesterday — and got some love on that one from the Pro Room:

 

Trading Legion:
The Trading Legion is an intermediate-level education and a long strangle/calendar trading vehicle. The goal is to teach students the best times to buy options.

 

      • I closed some short puts in PLTR Friday with the diagonal up 20% on risk and I got paid to own PLTR Dec. 17 20-strike puts to expiration.
      • I closed my Randgold Resources Ltd. (GOLD) diagonal call spread for a 70% position gain.

 

Volatility Edge & Volatility Trading Club:

Volatility Edge is run by Mark and uses the proprietary Option Pit VIX Light indicator to guide volatility trading. The Vol Trade Club is run by me (AG), and employs a long strangle strategy that seeks to use VIX future decay to pay for upside Cboe Volatility Index (VIX), iPath Series B S&P 500 VIX Short Term Futures ETN (VXX) and ProShares Ultra S&P Short Term VIX Futures ETN (UVXY) options.

The Option Pit VIX Stop Light Is Red and I expect several closes this week.  

 

Mark closed his VIX Edge Nov.17 16/18 put spread for a 41% gain today.

 

Remember, a lot of vol strategies I use are market neutral. That means whether SPX or VIX go up or down, the positions still make money. This is a technique you can learn in the Volatility Trading Club and Volatility Edge!

 

To Your Trading Success,

AG

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