perugius

[platochi @platochi]

Farming Vol on OPEX w/ Risk Reversals

I'm bullish on $ASTS & $NOK

> Both in negative gamma territory
> Gamma pin into OPEX with low IV
> Volatility expands in days after OPEX
> Both sold off after positive catalysts

May as well take advantage of the technical opportunity

$ASTS sold off after a successfully launching BlueBirds 8, 9, and 10 on Falcon 9

$NOK sold off after announcing a major expansion of U.S. semiconductor advanced test and packaging in PA

Their sell off today on good news is the perfect time to run risk reversals

Current positions:
$NOK Sell June/27 $22 P & Buy 2x $12 C @ $.1 credit
$ASTS Sell Sept/26 $70 P & Buy $100 C @ $1.0 credit

I'm taking the risk of being assigned in order to playing either organic growth or a mechanical gamma squeeze on a positive news catalyst.

Thanks to @lord_fed for pointing out risk reversals in his pain trade thesis as a defined risk + delta positive options strategies w/ minimal upfront cost.

And shoutout to @soulbiri1 who reminded me of my $CRWV trade where I also ran risk reversal & who inspired the $ASTS trade with his own risk reversal. Go give him a follow!

This strategy seems like a good place to park my money for a bit while I pause active trading.

Risk reversals are kinda perfect as I'm long in the underlying anyway & since I want to pause trading to learn smarter long term risk management options strategies.

I'm also really bullish on $NOK long term (and I owe folks my thesis on $NOK) as well as $ASTS after reading the Transhumanica thesis.

Positions in the thread below & this time I didn't position heavily all at once. I'll be scaling into $NOK & $ASTS calls taking advantage of June chop.

[perugius @Perugius__]

@DeepValueBagger Achieving smalls goals gets done quicker than large goals.

[Misaka Mikoto @soulbiri1]

$MSFT Lain Sign

All these hyperscalers and their huge AI capex are basically trying to create Lain if you really think about it. She's pretty good with 1990s computer tech so $MSFT seems like the logical choice here. Come live in the WIRED sponsored by Edge. Let's all love Lain.

[platochi @platochi]

I'm long $USAR for the G7 Summit

Today, in a WH video, Trump & Macron announced discussions over China's HREE hegemony with other G7 partners.

Japan has expressed frustration with Beijing's export restrictions for Japan's naval response in the Taiwanese Strait back in November & are expected to be a key support player in advocating for REE price floors (something the G7 remains skeptical about).

Also, today China's set mining controls on some strategic minerals (check out @cekdrew's coverage on it if you don't have Bloomberg article access)

The rare earth industry pulled back heavily during last week's correction due to being pre-revenue & high beta

Nonetheless, the industry is a strategic investment area for the US; you can read my earlier thesis on why $USAR is poised to receive interest for their positioning in heavy rare earths

Though the ongoing US Iran conflict will take up most of the G7 Summit discussions, with the conflict seeming to conclude, perhaps we'll see an emphasis in rare earths mid week.

Seems like a good time to reinitiate a long imo

[platochi @platochi]

$HOOD just crossed $90B MC

I nailed this thesis & stayed patient through the volatility

$HOOD to $100B MC

[Misaka Mikoto @soulbiri1]

$AIRJ Last Airbender Sign

$AIRJ has 4 letters and is $4, same # elements Aang masters as the avatar. Airjoule extracts excess heat (fire) from the atmosphere (air), useful for data centers (earth) and generates H2O as a byproduct (water). Thus Aang will reach the avatar state.

[perugius @Perugius__]

@Sandeman52 You’re doing pretty good. Much more gains to come!

[perugius @Perugius__]

@soulbiri1 @RJCcapital Black Monday will bring us the promised number

[perugius @Perugius__]

@jacobiinvest @jrouldz What’s the point in having so many small positions? You’re not a hedge fund dude.

[Misaka Mikoto @soulbiri1]

$USAR All Might/MHA sign

$USAR stock has been fluctuating the past few months. This is clearly a reference to All Might's power waxing and waning in My Hero Academia, which ends with him using the United States of Smash, an attack strong enough to break through chart resistance.

[perugius @Perugius__]

@platochi

[Misaka Mikoto @soulbiri1]

$AAOI Blue eyes white dragon sign

I was in a shadow game with my buddy after he stole my grandpa's soul when I realized that AAOI = aoi = blue in japanese, just like blue eyes white dragon. Also blue eyes shoots a laser (made of photons), bullish for photonics stocks like $AAOI.

[Misaka Mikoto @soulbiri1]

Selling deep ITM puts to acquire discounted shares with tax efficiency

Wanted to go over a position I entered a few weeks ago when $NBIS was dipping below $200 post earnings and I sought to increase exposure, but didn't have free capital.

I don't see this covered often so I hope this is helpful to some of you out there. Especially if you're trading in a taxable account and live in a high tax state like me where short term capital gains taxes cuts into short option profit (CC/CSP) significantly.

Basically, I sold a deep ITM put on $NBIS at the 290 strike for Jan 2027 with the goal of getting assigned. I used my margin buying power since I don't have free capital, but I wanted more exposure, with the caveat that I expect to be able to cover the shares at strike price less premium by January with income from my day job.

This accomplishes a few things

1) No upfront capital - instead uses my margin buying power. When you use margin in this way as options collateral, you do not pay margin interest which is a huge benefit.

2) Receive 132k cash up front from premium - which collects interest (~3%) or can be used to hedge Risk #2 below where $NBIS shares soar beyond $290 by next Jan by buying shares outright.

3) Comparable to longing the stock on margin and selling an OTM call at the same strike/expiry, however much more tax efficient. A short deep ITM put is roughly equivalent to long stock + CC in terms of risk and payoff, but has a few advantages. First, covered call premium is taxed at STCG, whereas CSP premium when the CSP assigned goes directly into reducing your cost basis of ownership on assigned shares. The lower cost basis can then be harvested later at a favorable LTCG rate for holdings >1 year duration. In essence, the options premium rewards you with a lower basis which is a lot more useful for tax portability than upfront short term premium.

4) Flexibility of risk reward - much like when you long a stock and CC you can choose the strike and expiry you want to play with. The risk reward tradeoff here is that higher strikes = higher intrinsic/lower extrinsic value + lower risk of assignment. Lower extrinsic value means less of a discount on the shares if a trade is successful, but you also have a greater margin of safety (e.g. if I sold 330P instead of 290P then I have lower risk of assignment, but my breakeven goes higher since the extrinsic value I extract is lower upfront when the option is sold).

5) Take advantage of IV shifts - when I sold this option $NBIS had an IV >90th percentile, which increases the attractiveness of the trade as an options seller.

The risks

1) Early assignment - is possible theoretically but practically unlikely so long as your ITM put holds significant extrinsic value (you should select a strike that still holds a decent percentage of extrinsic value), since a rational options buyer would not exercise and lose that value.

2) Option expiring worthless - In this case I would collect the full 132k credit, however this is actually not my aim since I would be taxed at STCG which would cut into my gains significantly. So while a suboptimal outcome it's not the worst thing in the world, and you can also hedge by using the upfront options premium to purchase commons.

3) Still functions as a synthetic long so you're exposed to delta from the underlying. In this case that's exactly what I want though because I am structurally bullish on $NBIS.

[platochi @platochi]

I've noticed that markets are efficient in creating max pain & retail traders have it very hard managing emotions during those moments.

Retail heavily relies on technical analysis, narrative, sentiment, & leverage, and that creates exploitable market inefficiencies short-term.

Especially when technicals breakdown, retail enters into a vicious selling cycle

> Those who have borrowed conviction on leverage are the first to capitulate expecting more downside.
> That fuels the next leg down where stop losses are congregated.
> Shorts, seeing the downside momentum enter here, and impatient longs exit as well.
> At this point, narrative shifts and sentiment turns on social media

When the dust clears, the shock sale leaves behind a huge supply for smart money to step in and swoop it clean.

Look at what's happening to $SIVE | $SIVEF or what happened to $HOOD last week.

There were two insider purchases by Malka Meyer @ 80 & @ 83 totaling $35M in the last two weeks. Taking advantage of the broader crypto market weakness & the macro weakness, $HOOD went from $83B MC to $70B MC in a few market sessions.

All while
> insiders purchased more shares,
> the business was expanding globally,
> Trump accounts started being rolled out,
> PDT was eliminated,
> met with the Trump Admin to discuss legality of prediction markets,
> provide access to the SpaceX IPO,
> and had analyst upgrades to $100B.

This week Robinhood will be working on supporting prediction markets for FIFA on their own platform, Rothera.

These will all positively impact @RobinhoodApp bottom line in Q2 or Q3, but all it took was a few low volume red days to shake out retail as institutions continue to load up.

During panic, retail supplies their pricey shares or options to institutions who get to load up at the same price as insiders.

I just hope to help combat that by much sounder trading/investing.

Don't change your conviction just because you see red.

As Munger said,

“I regard it as a part of manhood. If you’re going to be in this game for the long haul which is the way to do it. You better be able to handle a 50% decline without fussing too much. Conduct your life so you can handle a 50% decline with aplomb and grace. Don’t try to avoid it. It will come. And if it doesn’t come I’d say you are not being aggressive enough.”

[Misaka Mikoto @soulbiri1]

Trying something new now that I can make longer posts.

Three stocks that I'm long on and why:

$NBIS - my largest holding. When you buy $NBIS you are buying the optionality of Arkady creating the 4th hyperscaler. Despite owning $NBIS, I think the neocloud business model is sketchy in the long run, as I'm not convinced that neoclouds will have a durable competitive advantage against hyperscalers 5+ years out. The only solution is to grow out of being a neocloud and I think $NBIS is best positioned to accomplish this with its foothold in AI startups, frontier labs, and eventually sovereigns. Some other factors in $NBIS favor include derisking by long term contracts ($META, $MSFT) and strategic equity stakes ($NVDA), Yandex's prior experience with building data centers, and Arkady's track record of meeting or exceeding guidance.

$RDDT - a sticky social network with communities of human domain experts creating curated, high value content. Trades at an attractive valuation compared to peers. Plays a role in the AI ecosystem as a valuable pool of training data. Was unfortunately not added to the S and P 500 on Friday :( but will eventually be.

$HOOD -The gamblification of financial markets is a secular trend that will only continue with younger generations. Legacy brokers have less appeal and when boomers transfer their estates to zoomies they will naturally gravitate towards their preferred app. Has the best UI and benefits from fast rollout of new features (international stocks plzplzplz). Is also correlated with the crypto market which would be a contrarian turnaround bet at current prices.

All 3 of these are high beta growth stocks with high retail interest+visibility. Why this is actually a good thing: retail is accounting for an increasing fraction of trading volume vs institutions, so keeping track of trends and hot themes is important. After all, you need volume to move a stock. There is nothing more powerful than a meme stock with fundamentals.

[perugius @Perugius__]

@HunterBiden @zephyr_z9 @gmoneyNFT @Veganhippo21 your boys tweaking, take his pipe away. $PURR

[perugius @Perugius__]

@SpaceInvestor_D I think $rdw likes me