Let’s Cherry Pick ARKK’s Best Stock

Cathie Wood’s ARK Innovation ETF (NYSEARCA:ARKK) has been in trouble.

If you’ve been tuning into my free Profit Takeover shows, then you know that.

Last Friday, we were talking about the same thing. Long-term ARKK holders are asking for their money, and Cathie has got to dump some top holdings in order to pay them.

A lot of people watch ARKK. And its performance tends to emanate throughout the market.

When ARKK drops, so do its top holdings – names like Tesla Inc. (Nasdaq:TSLA), Coinbase Global Inc. (Nasdaq:COIN), and Teladoc Health Inc. (NYSE:TDOC).

But at this point, they’ve dropped to the point that some are oversold…

And I want to cherry pick their holdings while they’re essentially on sale. I already have – on the first of the month, I recommended going long on video game platform Skillz Inc. (NYSE:SKLZ), a stock ARKK bought 13.3 million shares of back in October.

And my Profit Revolution members had the chance to turn an 82-cent trade into $1.25 in five days for a quick 52%.

I give recommendations like that live every trading day. If you’re interested in getting the details of my next winner, then you can try the Profit Revolution for 30 days risk-free. Click here to learn more.

ARKK’s got some easy pickings right now. And there’s one stock in particular that’s down almost 24% in the past month:

Mystery ARKK Stock, Nov-Dec 2021

The stock you’re looking at in the chart above is Draftkings Inc. (Nasdaq:DKNG). And as you can see, it’s been completely oversold, going from a $50 name to a $30 name in a month’s time.

DKNG’s story isn’t over. This thing won’t stay caught under the rock that is ARKK for much longer.

I believe DKNG could get to $35 from here. And the December 31, 2021 $32 calls are less than $2 to play that bullish move.

I’ve Never Seen the VIX Drop Like This Before

Inflation is rising at the highest rate since 1982, according to this morning’s Consumer Price Index (CPI).

And how is the market reacting?

Well, the S&P opened up 20 points – and the VIX is getting smoked.

The VIX has gone from over 30 to under 20 in a four-day period – something I’ve never seen before.

UVXY is down almost 20% over the past five days!

Yellow Traffic LightAnd with futures expiration on the 22nd bumping up right against the Christmas holiday, all eyes are on the volatility index.

My light is yellow. That means the VIX could make wild moves in either direction.

But the chances aren’t 50/50 here. One direction is more likely than the other…

We’re in a position right now to see volatility make a run down to 16. Honestly, by the holidays, we could go below 15.

See, VIX expiration falls on December 22. And the market is closed on December 24 for Christmas. That means there is only one day of trading between expiration and the holiday week…

And volatility is going to get smoked on that. We could see the lowest settlement since pre-pandemic times. By January’s expiration, I wouldn’t be surprised if the VIX was sub-10.

Outsmart This Big-Money Buyer with a Better Trade

Check out this aggressive January call sweeper in Quantumscape Corp. (NYSE:QS):

A single customer bought 10,000 of the January $30 calls for $1.52 per contract.

That’s a $1.5 million trade – and it’s an outright bullish bet on the auto parts stock making a run at $30 per share by January expiration.

QS is a $24 stock today. But it wasn’t that long ago that it was sitting above $30:

QS Nov-Dec 2021

I like this trade.

And I have a trade to piggyback it – a better one.

The January $25-$35 call spread is less than $2 as I type. That’s buying the $25 calls and selling the $35 calls.

The money you make on the $35 calls will cut the amount you pay for the $25 calls. That’s how we cut the risk of this trade.

And we only need the stock to jump to resistance at $27 to see a profit here. We don’t need it to get all the way to $30 like this big-money buyer.

I’m confident our spread will be a better trade than this institutional buyer’s call.

Have a great weekend,

Mark Sebastian
Founder, Profit Takeover


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