Traders draw a Line in the Sand

Andrew Giovinazzi

BY ANDREW GIOVINAZZI

October 29, 2024

Yo Pit Crazies,

I had a nice milestone in the Flash 10 Hannah and I launched at the end of last month. I closed some Robinhood Markets Inc (Ticker: HOOD) calls for a 100% gain and it appears the Option Fingerprints are paying off. There will be more on that in the future. Several other picks are doing ok.

This is a crazy week with Big Tech earnings, the election next week and the FOMC on the 7th. Basically one long running Special Situation where option prices can move in a hurry. HOOD has earnings this week. I expect them to be good and I am still long and bullish on HOOD shares. As readers of this post know, that is a Special Situation for a stock because the known calendar date is a bit of a wild card with respect to how much it could move.

Oil stocks report a little later in the cycle. Right now Warren Buffet’s favorite oil company is trading near year lows.

So does this put action mean the great WB made a bad investment?

Let’s check it out.

Oil Stocks are Looking Ugly Lately

Do oil stocks go up when the prices are going down? No. Oil stock go down when prices are going down. There have been a lot of tells lately about DJT winning and I think oil stocks going down is one of them. Why? There should be more drilling under a DJT presidency and that should eventually make oil cheaper. Most of the oil projects were funded years ago so it takes a while to get oil out of the ground.

That put trader sold the puts for .06 in OXY.

That means they don’t mind taking stock at very low prices. That is likely some free money. Not free of course because the short put needs huge margin but it is certainly a buying opportunity. I would call that put a rip up or a “unit put” where they are likely out of the realm of possibility but have value anyway due to margin value. A Special Situation, just a different one.

To Your Trading Success,