Liz here, feeling skeptical. As you know, I’m pessimistic about lots of things, but especially the tech sector. PTON, NFLX, CMCSA, CRM, ZM – you know, you were there and made all the money.
And yet here comes Tom, and his expert Ghostbusters team, telling me they see a bullish move in tech this month.
As much as it pains me to say this, I can’t argue with the Money Calendar, because we’ve taken off two hefty Tom gains so far this week…and the 180% was on INTU, which is, in fact, yes, sadly, a tech stock as well.
WHO ARE YOU GOING TO BELIEVE, ME OR TOM???
I mean, actually, yeah, listen to Tom.
Speaking of Tom…and tech…I’m pretty sure the crypto deal where you sign up for Digital Heavyweights and get a free month of Tom’s Microcurrency Trader service is still on…so go ahead and call 866-776-0515 and ask Gabe about it.
And in the meantime, pick up Tom’s NVDA calls right here – and then cleanse your soul with something low-tech, like Legos.
My kid is home from preschool today with a “cough,” and when I asked him how he was feeling, he gave a very loud, theatrical cough and said “HORRIBLE.”
Happy Friday! FINE, go get your money….
The Ghostbusters Go Long Tech
Let’s go through a quick recap of our process last week…
We looked at the 1-month sector performance ,seeing which sector had weakness, and then looked for a security with a bearish Money Calendar pattern that would generate a bearish options opportunity.
We are reversing that process a bit today: we are looking at a sector with a bullish 1-month performance that can point us to a bullish Money Calendar pattern and bullish opportunity.
Back to www.sectorspdr.com and the 1-month correlation tracker. Technology is strong and only trails the Consumer Discretionary sector.
Technology has securities that tend to have more robust price moves so as we look to the Money Calendar data we see NVIDIA Corporation (NASDAQ: NVDA) at the top of the list when sorted by largest Power Meter.
Power Meter measures the average profit move over the period of days in the more recent few years vs. the average profit over the past 10 years. If the average profit move in the more recent years is greater that that of the past 10 years, that is a good sign.
Obviously, this can happen with multiple securities at once. Our tools just sort by the largest power meter to the lowest, (and we are researching further on NVDA as it has the highest power meter reading).
It is a 30-day pattern. It has a 90% accuracy. The avg. profit over this period of days the past 10-years is $6.62 pr 6.62 points.
Option Scenario One: Call Credit Spread
This is where you would Buy to Open the lower strike call and on the same order ticket Sell to Open a higher strike call.
Pure long call options we would consider have prices that exceed the amount we wish to spend on a per contract basis, which is why just the Call Credit Spread.
This is a potential 104% ROI.
The way that is realized is NVDA needs to be trading above the sold strike in the spread at expiration.
That way Assignment and Exercise has a chance of happening where the markets can assign the stock at $185, meaning the market can call away the stock at $185 where the account can then call away the stock at $180 to deliver the stock at $185.
The account gets $5.00 offset by the cost up front of $2.45 or gets end result $2.55.
Making $2.55 on $2.45 cost is the 104% ROI.
Note: NVDA reports earnings per www.earningswhispers.com after market close on August 24, 2022.
We can’t tell you all what to do, but we wouldn’t hold a Money Calendar option trade over an earnings report on purpose, so consider closing this out win, lose or draw, before the close of market August 24, 2022.
Here’s what to do:
|DOLLAR SLOTS: TOM
Action to Take:
Buy to Open an NVDA September 02, 2022, $180 Call and on the same order ticket, Sell to Open an NVDA September 02, 2022, $185 Call at net debit of $2.45 GTC.
Enter as a Good til Canceled (GTC) order.
Liz again! Have a great weekend – I’ll be back tomorrow with MONEYSCORE and, as always, a Supremely Unhelpful Movie Review.
July 22 2022