Cathie Wood Just Dumped This Housing Stock – and I’m Bullish
Cathie Wood’s Big Mistake
I’m bullish on all three of these stocks.
- Intel Corp. (Nasdaq:INTC)
INTC is my favorite chip stock by far. It’s in the Money Morning LIVE portfolio… and for good reason.
Now, it’s down more than 10% over the past month:
INTC November 2021
But I think it’s too cheap. And those are the magic words.
When a stock is too cheap, when options are too cheap – that’s the time to get in… and get bullish.
- CVS Health Corp. (NYSE:CVS)
CVS recently announced that it will be closing locations – 900 stores over the next three years. That’s about 10% of its stores.
Now, you’d expect the stock to go down on news like this. But it actually went up…
And I agree with the stock’s movement. In fact, I think it’ll go even higher from here. There may be fewer physical locations, but CVS is becoming a full-service medical company, not just a drugstore.
That’s a positive future for the stock that’s going to send shares higher in the short and the long-term.
- Zillow Group Inc. (Nasdaq:ZG)
Cathie Wood has a bad habit of bailing out of stocks at the wrong time. And she did just that yesterday, dumping almost all of her ZG holdings.
Frankly, I thought ZG was oversold before Wood dumped her shares. So now that she’s out, I’m really looking for the stock to go up.
Incoming… Thanksgiving Volatility Blip
Yesterday, we were up 15 points in the S&P. The Nasdaq was off to the races. Yet, VIX futures went higher.
Typically, this worries me. But when you look at the total number of stocks up versus the total number of stocks down, it becomes clear that this rally isn’t being held up by the majority of the market.
Rather, there are a few big names in the green that are taking over all of the red. So, the strength in the VIX makes sense today.
But what about next week? What about next month?
Short-term, I do think we’re due for a little blip. Early next week, in fact, we could touch 19.
Thanksgiving week tends to be a low-volume week in the market. But when trading volume is low, that’s when the bears can come in.
I don’t think the VIX strength will stay though. In December, I’m looking for a new post-pandemic settlement low.
Trading with the Big Boys
Usually, we trade volatility in individual stocks. Low implied volatility (IV) means that a stock’s options are cheap…
And ripe for asymmetric returns, like the ones we target at the Profit Revolution.
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And then, check out this a real eyebrow-raiser of a straddle trade…
A customer bought a huge chunk of the December $21 calls and a huge chunk of the $21 puts for $5.45.
For the straddle to end up in-the-money (ITM), the VIX needs to settle either below 16 or above 26 in December.
This trader is looking for the VIX to collapse into the holiday season…
Or they’re concerned that the VIX will blow higher.
This is essentially a play on wild movements in the VIX – something I’d be interested in executing if my VIX light were to turn yellow.
But instead of piggybacking, I’ve got another VIX trade betting on a drop…
PLUS a way to hedge it.
I’m long the December $17 puts in the VIX for about $0.50. But I’m interested in hedging this play with a call spread.
I’d recommend buying 10 of these, and hedging it with a single spread.
You can buy the VIX December $23 call for $1.95 and sell the $32.50 call against it for $0.95, paying just $1 for the spread against your $17 puts.
It sounds complicated – but if you want to play with the big boys in the VIX, then you can’t just blindly buy calls and puts.
Have a great weekend,
Mark Sebastian
Founder, Profit Takeover
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November 19 2021
Thanks Sir