Yo Pit Crazies,
Yesterday, I woke up to the tranquil sound of snow falling.
Yes, when you live in the woods of Maine, you can hear the snow fall.
But that was not the only SNOW that fell …
Snowflake Inc Class A shares (Ticker: SNOW) fell, too.
And they fell hard.
Is it time to get in?
If so, are you in for fashion or do you have style?
Here’s what I mean …
SNOW Has Breakneck Growth
SNOW is not a dot-com stock, but it was driven to great heights by the Robinhood crowd.
That crowd is going back to work.
Looking at the stats on option volume, option volume is down year over year.
Not a great sign for growth stocks trading at very high multiples. SNOW traded $400 at the height of the Reddit boom and judging by my dot-com indicator, it wouldn’t surprise me to see another 30% drop at least.
We are talking $1 billion in revs and $80 billion in market cap. Still pricey in a bear market.
SNOW two-year chart with 30-day IV on the bottom in red.
The question now is, do you want to trade a fashionable bounce?
Or …
Invest in style?
I have very little interest buying short-term calls for a bounce in stocks with the general market fatigue.
A 1×2 put spread in SNOW struck with the short strikes at 175 looks appealing and that would put me in at $150.
The reality is the high growth stocks are going to get whacked with everything else.
THE LESSON: Whatever is bought is going to be worn for a while, so find a stylish price.
The Rundown
Capitol Gains w/ Frank Gregory
I was able to add some Guggenheim Solar Trust ETF (Ticker: TAN) strangles yesterday.
Power Income Trader
Bill’s Palantir Technologies Inc. (Ticker: PLTR) play will most likely get called away.
Nitro Trader:
Option Pit CEO Mark Sebastian uses a formerly private strategy for trades that can profit in either direction.
Mark closed the SPDR Dow Jones Industrial ETF (Ticker: DIA) leg of his first Nitro Trade for 41% gain and is now riding the iShares MSCI Taiwan ETF (Ticker: EWT) put spread to $60.
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.
The Pro Room was opening a few yesterday:
Big Money Flow:
Mark closed all of Cleveland Cliffs LLC (Ticker: CLF) calls for a 88% net gain.
Volatility Edge & Volatility Trading Club:
The Option Pit VIX Light Is Green, as the market for VIX futures is in full backwardation. SPX is still going sideways.
To Your Trading Success,
AG