A Backdoor Way to Trade the Crypto Craze
The last name on my Watchlist yesterday was CME Group Inc. (Nasdaq:CME).
CME is an American global markets company. It’s also the largest financial derivatives exchange in the world, trading agriculture products, energy, interest rates – I could go on.
But one of the most important asset classes that CME trades – and the one we’re interested in today – is cryptocurrencies futures.
When most people think about trading the crypto market, they usually envision buying Bitcoin, Ethereum, or even meme names like Dogecoin.
But as these coins are adopted for real-world use, they aren’t the only names that will benefit from their increasing popularity.
In fact, I think CME will be one of the biggest beneficiaries of mass crypto adoption. And that’s where I’m putting my money.
Volume is exploding in the cryptosphere – or, more particularly, the microsphere.
On May 11, CME announced that Micro Bitcoin futures trading volume exceeded 100,000 contracts during their first six days of trading.
Essentially, Micro Bitcoin futures are just smaller versions of CME’s current Bitcoin futures. While standard Bitcoin futures are based on a five Bitcoin contract unit, Micro Bitcoin futures have a contract unit of just 1/10 Bitcoin.
This allows more than just institutional traders to manage their Bitcoin price risk – making Micro Bitcoin futures accessible to retail traders like you.
And the incredible initial volume spike is a sign of Micro Bitcoin futures’ success.
But the volume didn’t stop there. CME made that announcement on May 11 – and check out what volume looked like on the Micro Bitcoin futures a little over a week later:
Click To Enlarge
Micro Bitcoin daily exchange volume chart May 3-21, courtesy of CME Group
Clearly, crypto is the next blockbuster product for CME. As the digital assets grow closer toward mass adoption, trading volume will undoubtedly spike even more… and hopefully pull CME shares higher with it.
Today, CME share price sits around $215. In my opinion, that’s nothing – I see it heading to $250 by July. That’s a 16%-plus jump in about a month’s time…
And it’s one we’re going to leverage into a quick asymmetrical return with options.
To capitalize on this move – and add CME to the Profit Takeover portfolio – here’s what I suggest…
Buy the CME June 18, 2021 $217.50 calls for $3.10 or less.
You can track this trade starting tomorrow right here, on the Profit Takeover portfolio page. Prices are updated daily.
Speaking of our portfolio – after closing bell today, Nordstrom Inc. (NYSE:JWN) reports earnings.
JWN was one of the very first trades to take up residence in our portfolio. Today, our call sits at about breakeven. But we’re in this one for the long-term – it doesn’t expire until early next year, after all. And tonight’s report could send JWN skyward tomorrow.
I’ll be keeping a close eye on JWN’s report this evening – and tomorrow, I’ll tell you exactly what it means for your money.
Stay tuned…
Going Live: Thursday, May 27 at 2:00 p.m. ET
Tomorrow, the ProShares Ultra VIX Short-Term Futures ETF (BATS:UVXY) will undergo a reverse split. This ETF is about to go from $4.00 to $40.00 – opening a massive profit opportunity to profit on the bearish side. And on Thursday, I’ll go live to tell you exactly how to do just that. Tune in right here at 2 p.m. ET. See you then.
VIX Traffic Light
The VIX is up slightly today, and again the traffic light is yellow.
We’re starting to get in the air here, and I believe we’re at an inflection point.
From here, the VIX is either going to bounce, and the market will sell off…
OR we’re going to a red signal. Check back tomorrow to see which light we see then.
Mark’s Watchlist: Travel Stocks
As we head into Memorial Day Weekend – one of the most popular holidays for summer travel – there’s one sector lighting up my screen…
And that’s travel – most particularly, airlines and cruise lines. Take a look:
- American Airlines Group Inc. (Nasdaq:AAL) (+2.26%)
Up more than 4% today, AAL is the largest airline by fleet size. And they’re going to have more people available to fill their planes as more and more of the world becomes vaccinated against COVID-19.
- Delta Air Lines Inc. (NYSE:DAL) (+1.91%)
By comparison, DAL is the biggest airline by revenue. And it’s benefiting for the same reason as AAL right now – increased travel demand.
- Boeing Co. (NYSE:BA) (+2.14%)
BA has been a company under scrutiny for years now. Yet, it remains the world’s largest aerospace company and leading manufacturer of commercial planes and defense systems. And as travel booms… so will this stock.
- Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) (+3.49%)
Cruise lines were some of COVID-19’s biggest victims from an economic standpoint. But now, the weather is getting warmer and people are ready to cruise the sea once again – bringing this industry back from the ashes.
- Carnival Corp. (NYSE:CCL) (+3.26%)
The same goes for CCL, which is up 42% year-to-date… and climbing.
The moment any of these stocks becomes poised for an asymmetric return, I’ll let you know. For now, you can track the Profit Takeover portfolio right here.
Until tomorrow,
Mark Sebastian
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May 25 2021
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