Disaster Ahead: Time to Turn This SPAC’s Doom into Cash

Mark’s Watchlist

1. Senseonics Holdings Inc. (NYSEAMERICAN:SENS)

This meme stock has a story. Reddit traders aren’t pushing shares of the medical tech company up for no reason. No, SENS announced positive results regarding the efficacy of its glucose monitoring system – giving this meme rally some legs. The stock is up over 350% year-to-date, and opened over 8% higher at this morning’s bell.

A cheap way to play SENS? I’m going far out, looking at the January 2022 $3-$10 call spread for just $1.05.

2. Energy Transfer LP Unit (NYSE:ET)

With a home on my Watchlist multiple times, ET has been a slow-moving freight train moving reliably higher. Right now, implied volatility (IV) on the gas company is at a 52-week low. And the July 30, 2021 $11.50 calls are just $0.50 for an incredible pay off. With ET heading to $14-$15, this play is low-risk and high-reward.

Now, as a reminder, neither of these trades will be added to the Profit Takeover portfolio. They aren’t official recommendations – just trade ideas that I wanted to share with you in case you want to make some of your own trades.

An official trade is coming this week – so keep an eye on your inbox. And in the meantime, check on the status of our open portfolio right here.

Cashing in on Lordstown Motors

Special purpose acquisition companies, or SPACs for short, gained fast popularity this year as a new way for companies to go public.

Instead of going through the traditional IPO process, SPACs are essentially shell corporations listed on a stock exchange with one purpose:

Acquiring a private company.

That’s exactly what Lordstown Motors did back in October. But today, less than a year after going public, RIDE sits over 70% lower than its 2021 high – including an 18% drop this morning.

What happened?

Well, last week, the electric car company warned that it was dangerously close to running out of money and may not be able to survive the rest of the year.

That’s never good news for any company – especially a new one like RIDE. And it’s only gotten worse from there.

This morning, the company announced that both its CEO and CFO resigned, sinking shares even further.

So, what’s next? Well, I can tell you this – it’s nothing good for RIDE. But it could be good for your wallet.

This is the first real shoe to drop on a SPAC.

Now, I’m not saying RIDE’s fate is going to rub off on the rest of the SPACs we’ve seen this year. But it’s something to note – and it could be the key to your next profit.

Really, playing RIDE is simple. This thing is going down… far.

At one point this year, RIDE was a $30 stock. Less than a week ago, it was $15. Today, it’s dipping into the single digits.

And it’s got even further to fall. I mean, we could see shares drop to one or two bucks.

So, what’s your answer? One word: puts.

We’re as bearish as ever on RIDE, and straight puts are the simplest way to cash in on a falling stock – which is something you can’t do by simply buying a stock.

With a put, you can leverage RIDE’s fast crash into an asymmetrical return. You know how it works – just last week, we took a 100%-plus profit on a UVXY put, after all.

So, here’s my advice: pound this thing. Because it’s going lower.

VIX Traffic Light

Red, red, red.

On Friday, the VIX closed at its lowest level since the pandemic began.

I’ve been forecasting a VIX drop to 15 by the Fourth of July for weeks now. But now, I think we’re going to see that number a little sooner.

On Wednesday, the VIX June options will expire – something I’ll dive deeper into tomorrow. But for now, know this…

We could see the VIX drop to 15 by Wednesday. And by the Fourth, I see it heading to 14 or 13.

So, for all of those asking – yes, my VIX light is still red. And I expect it to stay that way this week.

Today’s Impact Money Trade

A trade on the Financial Select Sector SPDR Fund (NYSEARCA:XLF) popped out at me today when scanning for unusual options activity:

Click To Enlarge
This ETF tracks the performance of the financial services sector, with holdings in Berkshire Hathaway Inc. Class B (NYSE:BRK-B), JPMorgan Chase & Co (NYSE:JPM), Bank of America Corp. (NYSE:BAC), and more.

We’re looking at a big-money trade here, with 9,500 weekly July 2, 2021 $37-strike puts.

It’s clear – someone is betting on a quick bearish slide for the financials.

And that’s all for today, folks.

I’ve received a lot of questions regarding the VIX. And it is my favorite indicator – one I could talk about all day, in fact.

And that’s exactly what I’m doing tomorrow.

Stay tuned,

Mark Sebastian

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