| | | | NEW MONEY CREW
WEEKLY RUNDOWN Hey traders, Lance Ippolito here! Welcome to Weekly Rundown, where we'll share some of our top trading ideas — and our biggest winners — from the New Money Crew!
The big news this week… at least before they cratered after the market opened Thursday, was pot stocks. These babies were riding high (apparently the Reddit crowd was at it again) before one of the biggest sector sell-offs we've seen in a while.
But something a little more under-the-radar also broke this week, and it's a much bigger deal.
And that's a shortage of semiconductor chips. These chips operate as the "brain" for a million different products… electric and gas-powered vehicles, computers, cellphones, TVs, gaming consoles… these little babies are everywhere…
Certain industries in our tech-heavy world are going to suffer as demand will be too great, far outpacing supply. Take a look at General Motors, which extended temporary shutdowns at three assembly plants until mid-March due to a global shortage of semiconductor chips.
Ford Motor was forced to cut production as well, and the company said the shortage could slash its earnings by $1 billion to $2.5 billion this year. That's going to be a tough pill to swallow, and it won't be good for stocks.
So how can we take advantage of the shortage? Well I'm glad you asked because I have some tips on how I'd trade Nvidia and AMD, the king and queen of the semiconductor industry!
Nvidia Corp. (Nasdaq: NVDA)
Nvidia has been consolidating around its baseline since September 2020, not doing much. But when this five-month long consolidation finally pops up or down, the built-up energy will be released in an explosive way.
I've also noticed over these past couple of trading sessions that there's a massive amount of call buying going all the way into the February monthly $700 strike calls… That's $110 out of the money. That means someone thinks the stock is going to pop up $110 a share — clearly a BIG move.
I took a bullish position in Nvidia, selling bull put credit spreads to finance long call spreads because the options are so expensive for a $600 stock.
The catalyst? Earnings on Feb. 24, just in time for the Feb. 26 expiration date. Based on everything I'm watching, I expect to see bullish momentum, implied volatility and an increase of volume — pretty much everything I like in a bullish trade..
Advanced Micro Devices Inc. (Nasdaq: AMD)
I have another bullish trade in AMD for all my 2-Click Profits members out there. I sold bull put credit spreads and this is what I like on AMD…
When I got into the position, it was trading at just over $90 a share. It pulled back about 10% off its high, which I love. Because unlike Nvidia, which is already at a 52-week high, this thing has some juice left to squeeze. We have a trendline breakout and implied volatility picking up.
This is a very bullish move here and Intel actually just said it has a shortage in chips, causing AMD to spike. Basically I'm just looking at prior resistance levels to take out on volume. And if AMD moves above $96, it's going up to $100. But why $100? Because stocks like big, round numbers… they're like magnets.
So you can probably look at a February monthly expiration $100 call fly. I ran the numbers and guess what… that strike and expiration has a boatload of open interest… 42,000 contracts, and the $95 calls have 29,000 open contracts.
So you could do something like a $95 to $100 to $105 bull call fly, which would give you about a 5:1 risk vs. reward.
Here's how you could do that:
- I'd buy the $95 calls.
- I'd sell double the number of $100 calls.
- And I'd buy the $105 calls.
That's risking $65 a contract to potentially make $435 IF AMD hits $100 a share by Feb. 19.
BANG! That's a beautiful trade set-up!
Now, on to some...
BIG Wins!
Guys, it was another banner week for Blitz Alerts!!
We had one "large" open position we entered way back on Nov. 30 in Glu Mobile Inc. (Nasdaq: GLUU) absolutely EXPLODED 34% overnight on news of a buyout with Electronic Arts Inc. (Nasdaq: EA), sending our calls soaring!
- +82.14% on GLUU (March 19 $10 CALL).
- Entered on Nov. 30 at $1.40 a contract.
- Exited on Feb. 9 at $2.55 a contract.
Back on Nov. 30, we saw repeat call buying in GLUU, with December and March expirations. Glu Mobile, which makes the Kim Kardashian mobile game… I'm sure you're all big fans…
We took the March options on these to give the play more time, and it couldn't have worked out better!
We also bagged another big win on Zynga Inc. (Nasdaq: ZNGA) on an earnings play after some big orders came across the tape. There have been a lot of buyout rumors regarding Zynga and Tencent Holdings (OTCMKTS: TCEHY), and with 40,000 calls trading on Feb. 5, we pushed out to the monthly expiration and a closer in-the-money strike price, increasing probability of a win. This trade ran in three different groups of contracts. The first group was closed last week and the second this week for a 90% win. We then left a small runner of contracts to catch earnings, and we sold those off Thursday morning.
- +90.48% on ZNGA (Feb. 19 $11 CALL).
- Entered on Feb. 5 at $0.42 a contract.
- Exited on Feb. 9 at $0.80 a contract.
- +66.67% on ZNGA (Feb. 19 $11 CALL).
- Entered on Feb. 5 at $0.42 a contract.
- Exited on Feb. 11 at $0.70 a contract.
We saw 504 contracts on the Feb. 19 $11 strike come across the Blitz scanner, and another 951 contracts on the $12 calls by the same date, so we entered a position and damn near doubled our money! The underlying stock bounced to $13.25 and we closed our position for a massive 181.25% gain — like Treasury Secretary Janet Yellen, we're printing money...
- +181.25% on CENX (Feb. 19 $11 CALL).
- Entered on Feb. 2 at $0.80 a contract.
- Exited on Feb. 10 at $2.25 a contract.
We added these calls as the market moved aggressively that morning. And with earnings coming up, it made sense — and paid off big! As I noted in my Blitz Market Color (where I offer up big orders coming across the tape for trade ideas just for you!), CCJ calls were hitting all morning following a Merrill Lynch report. We saw a lot of February and March call buying, with 28,000 March $17 strike calls trading, and 15,000 more of the March $20 calls.
- +83.33% on CCJ (Feb. 19 $14.50 CALL).
- Entered on Feb. 1 at $0.90 a contract.
- Exited on Feb. 10 at $1.65 a contract.
Earnings call buyers were out in force for Under Armor, with 16,000 March contracts moving in the $1.05 to $1.37 range. Earnings were on Feb. 9 so we also saw a lot of February calls as well. This was another big, big winner as the underlying stock rose to $22.70 before the sell-off.
- +130.77% on UAA (March 19 $20 CALL).
- Entered on Jan. 20 at $1.30 a contract.
- Exited on Feb. 10 at $3 a contract.
My Weekly Blitz Alerts are issued based on institutional order flow in the options market tracking and trading the largest, single-stock options orders throughout the day. In addition to trade alerts, I also offer up daily market commentary that you can use to come up with your own ideas based on order flow coming into my scanner.
And if you have a big score you'd like to share with your fellow New Money Crew readers, email us your screenshots of the trade and/or any details you want to share at wptestimonial@gmail.com, and we'll celebrate them here!
The 'SPAC Revolution' of 2021
Ever heard of a SPAC?
It stands for "Special Purpose Acquisition Company," which is essentially a little-known way for private companies to take their businesses public.
Most people have no idea that this type of IPO exists. And yet those who get into these deals before they take off can see their investments skyrocket by triple, even quadruple digits.
Wall Street insider Jeff Yastine has closely followed the SPAC revolution for over a year now, and he's identified 10 SPACs about to take off — in short order.
Jeff has put together a special report detailing these 10 investment opportunities… and how to get into them miles ahead of everyone else.
Click here to claim Jeff's SPAC Rolodex for yourself.
2 Undervalued Stocks Set To Soar By March
We've seen an onslaught of unpredictable moments already this year — and we're barely halfway through February! Since the short-squeeze mania around GameStop and AMC, spurred by thousands of Reddit users, I've been looking for undervalued stocks set to rise into March.
And guess what… I found them! These two more old-school names are on the rise, and they could soar with bullish momentum into next month.
◾ Honeywell International Inc. (NYSE: HON)
Honeywell operates in four different markets: aerospace, building tech, performance materials and safety and productivity solutions.
Looking at its daily chart, HON has moved mostly sideways since mid-November in a consolidation phase. And usually when this happens, the underlying momentum and energy in the stock begins to coil like a spring.
And when it breaks out, either higher or lower, the spring unleashes all its momentum, driving the price. And it just so happens that some investor(s) bought 1,500 of the March monthly call options right before market close on Jan. 15 — about a $1.6 million bet! Seeing a bet like this is odd, but I get why this investor made this move.
It's stocks like this, one many investors ignore, that end up creating huge paydays for options traders. Contracts are relatively cheap due to low implied volatility. And I have a sneaking suspicion the same investor just spent another $1.5 million on the next stock…
◾ Union Pacific Corp. (NYSE: UNP)
Shortly after the HON calls came in, another massive order hit the tape on UNP. This is just an assumption, but it could be the same trader or fund here as well.
Again, March calls and almost the exact same amount of money, right after the other trade. And what I found interesting was over the holiday weekend after the trades were placed, we had Keystone Pipeline news. The Biden administration basically nixed it, and who's the big beneficiary of that?
Warren Buffett…
And what does he own? Railroads (and a few other things, of course…). So you put 2 and 2 together there and it makes sense.
And now for a bonus round! If you look at other transports and railroad names out there, including FedEx Corp. (NYSE: FDX), specifically, those names have really pulled back from the highs and could also be presenting a dip-buying opportunity.
So keep your eye on some of these old-school stocks!
Signing Off
If you're looking for more compelling trade ideas and stock market musings to read and help you prepare for what lies ahead, here's what other experts at WealthPress are saying:
Lance Ippolito
New Money Crew |
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Disclaimer & Disclosures: The information in this email is intended for informational purposes only and does not guarantee specific results as there is a high degree of risk involved with trading. Also, our traders are real traders and may have financial interests in the companies discussed. Please see our Terms and Conditions for more information.
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