Why I’m Not Trading TSLA Right Now
Don’t get me wrong; this thing is an unstoppable force on the charts. A market cap of $1T plus is nothing to sneeze at!
But it’s starting to feel just a little euphoric to me. When I hear cocktail party chatter from TSLA employees about how much their personal wealth has exploded, I want to steer clear from a potentially frothy situation in the stock.
(Yes, folks, this is the kind of boots-on-the-ground research you only get from me, Mark Sebastian.)
That said, where TSLA goes, the rest of the electric vehicle (EV) sector seems to follow…
And make sure you catch me Tuesday, Nov at 12:30 PM Eastern on Money Morning LIVE!
If you don’t know by now that I love Ford Motor (F) – well, do you even Profit Takeover?
This company easily takes second place behind TSLA in the EV race, but I don’t see any danger of euphoria on this name like I do on TSLA.
Once the chip shortage gets under control, Ford’s going to be selling these Lightning trucks like hotcakes.
This company’s set to be the big winner in traditional American cars – hang onto this one, folks.
I like the low-priced Ford December $17 calls to play the upside in this stock… and more on how to trade chips in just a minute.
What Could Cause an “Absolute VIX Crush” This Month
I think VIX will keep falling through the week as the S&P and QQQ continue to melt up, even though the upcoming nonfarm payrolls report on Friday could keep a bid under the volatility index.
After that data comes out, though? We could be headed for a 14 VIX, maybe even 13.
But there’s one “canary in the coal mine” I’m watching in this market.
Big money bought Amazon (AMZN) and Apple (AAPL) off the lows like clockwork on Friday, and it seems like this mega-cap rally is unstoppable.
Heck, even Coca-Cola (KO) was rallying on news it was buying Bodyarmor for $5.6B – showing the “norms” in this market are completely out of whack.
I still like the S&P to hit 4,600 by the end of the month and 5,000 by the end of the year, but I’ve got my eye on the small-cap Russell 2000 Index (RUT) as a possible “canary in the coal mine.”
Mega-caps might be charging higher (no pun on TSLA intended), but the much broader-based RUT can’t seem to catch a bid.
As for the VIX, I’m watching the 15-strike puts expiring Nov. 17. These contracts only cost about a dime, and they’re the biggest open interest strike among all VIX options.
Traders have been buying them in bulk – I’m talking 15K and 20K clips. The large accumulation here could be something to keep an eye on; if vol falls off here, this heavy open interest could force VIX lower on a gamma squeeze.
My Cheap Chip Puts and Two Ways to Trade HUT
I’m also tracking a downside play on a volatile semiconductor stock, and putting my own spin on a Bitcoin mining stock that volume profile specialist Olivia Voz dug up.
- HUT Nov19 $13.50 calls for $1.63
I love working with Olivia Voz on the morning show to build options trade ideas out of her chart analysis on the volume profile – and today she highlighted Hut 8 Mining (HUT), a Bitcoin mining stock with breakout potential. While she suggested selling the $10-strike puts on her VP show last Thursday, I’m liking the odds on those November $13.50 calls for HUT.
- AMD Nov19 $115 puts for $1.90
Advanced Micro Devices (AMD) AMD is on my radar, and not in a good way. The semiconductor stock blew the door off earnings, but then made several bearish hammers in a row. AMD looks set for a run back at maybe $110 – and meanwhile, implied volatility (IV) is dirt cheap. About as cheap as it gets in AMD, in fact! Plus, Voz has been calling for an AMD breakdown on her VP charts – just another bonus. I like the AMD November $115 puts to play this pullback, and would look to flip them for $3-$4.
Hope to see you live at 12:30 PM Eastern tomorrow!
Founder, Profit Takeover
November 01 2021