Portfolio Update: Exit NVDA Now

During yesterday’s live trading event, I broke down all of the positions in the Profit Takeover portfolio.

If you missed it, you can catch a replay right here.

And today, we’re taking action – specifically on Nvidia Corp. (Nasdaq:NVDA). This trade didn’t move as expected, so we’re going to cut our losses and move on.

Here’s how:

Sell-to-Close the NVDA August 06, 2021 $180 Put at market.

I’ve said it before, and I’ll say it again – we’re after asymmetric returns. That means we’re risking a little to make a lot. So it doesn’t matter if we lose here and there. In fact, we could lose more often than we win and still make money.

We’re simply clearing room in the portfolio for more potential winners – like the Apple Inc. (Nasdaq:AAPL) put that we opened yesterday.

You can track that trade – along with the rest of the portfolio – right here.

Robinhood IPO Forecast

Today marks Robinhood’s entrance to the public market with the trading platform’s long-awaited IPO under the ticker “HOOD.”

This is an IPO that’s going to make history – and I’m not just talking about the stock’s performance.

The IPO itself is straying from the norm. But it’s Robinhood, so is anyone surprised?

First off, execs gave a livestream presentation to the public last weekend detailing the aspects of the IPO – a “roadshow” that’s typically reserved for hedge funds and big banks.

They’re also saving 35% of shares – that’s $770 million worth – for their app users. Typically, companies only reserve 1-2%.

Now, this is a risky move. Individual investors tend to sell stock more quickly than the long-term institutional folk, meaning the stock could tumble fast.

This may not be typical of most companies. But it is typical of Robinhood, a trading platform that boasts a goal of “democratizing trading.”

As Robinhood becomes not just a trading medium, but a trading product, I’m here to tell you where the stock is headed post-IPO.

We’ve seen the power of Robinhood traders to push a stock skyward.

AMC, Gamestop, Tilray – the list goes on and on. So there’s no telling what these “little guy traders” will do with Robinhood shares.

That said, I’m expecting a pop in this name on the IPO… but not a long-lasting one.

I’m talking a pop followed by a drop. But it’s not a move I’d encourage you to get in and fade.

I’d stay on the sidelines for now and watch this IPO play out. Trading an IPO can be a risky move – and I’d rather wait for HOOD to establish itself as a stock before I put my money into it.

I’m going to cover even more on the Robinhood IPO live during tomorrow’s Money Morning Live show. You can tune in right here – we kick off at 8:30 AM ET sharp!

VIX Traffic Light

We’re looking at a yellow VIX light after we changed colors yesterday.

Why? Well, the S&P was up – and so was the VIX.

Remember, these two are supposed to move opposite of each other. When one goes up, the other goes down. When they move in tandem with one another, that means a big move is coming.

With volatility in the VIX high today, we’re being careful. Yellow VIX means tread lightly – I’ve got a close eye on this market, and you should too.

Mark’s Watchlist + Four Bonus Trades

  1. Draftkings Inc. (Nasdaq:DKNG)
  1. Facebook Inc. (Nasdaq:FB)
  1. Apple Inc. (Nasdaq:AAPL)
  1. Wells Fargo & Co. (NYSE:WFC)

We’ve got bullish and bearish names on this list, and I’m telling you the best way to play each of them.

That’s right – with each stock on the watchlist today, I’ve got a bonus trade idea.

  1. Draftkings Inc. (Nasdaq:DKNG)

Olympics gambling just got bigger after Simone Biles’ surprising withdrawal from the team and individual all-around gymnastics events. On Monday, I told you about gambling stocks rising thanks to the Olympic games – and now, I’m looking at a short-dated trade to ride the momentum through tomorrow.

When you’re playing short-term trades like this, you need to be extremely on top of it with very tight opens and closes. That said, I’ve got my eye on the July 30 $51 calls for about $0.60-$0.70.

  1. Facebook Inc. (Nasdaq:FB)

FB reported earnings yesterday, and just like the rest of big-tech’s reports, it beat expectations. FB’s EPS beat by 19%, and its $27.89 billion in revenue beat expectations by 4.25%. Yet, on this morning’s open, FB was down nearly 3%.

This doesn’t surprise me – you know I’ve been forecasting a big-tech sell-off. But this downfall won’t last forever. So, I’m looking at an opportunity to buy the $360 puts expiring tomorrow – then take the profits and move on.

  1. Apple Inc. (Nasdaq:AAPL)

Just like FB, AAPL’s earnings blew the door off of analyst expectations. Yet, the stock dropped. And I think it’s going to keep moving lower from here, at least in the short-term. Right now, AAPL sits at about $146 per share. I think we’ll see it trade below $140, maybe even as low as $138 before it rebounds again toward $150.

Yesterday, I recommended the AAPL August 6 $145 put during our live trading session, which you can track right here in the portfolio. But if you’re hungry for more, check out the August 13 $145 puts for about $2.75.

  1. Wells Fargo & Co. (NYSE:WFC)

Big money is flowing into this dumpster-fire bank. Someone bought 20,000 October 15 $47.50 straddles:

That means they bought the $47.50-strike calls and the $47.50-strike puts. It’s a short play hedged with long calls. But all in all, this is a bearish trade – and I agree.

I think WFC is managed terribly. It’s a hot mess, and the stock is going down. How to piggyback without buying the straddle? Well, you could look at the September 17 $45 puts for about $1.75.

Tomorrow, I’m answering another round of Ask Me Anything questions. Want to know more about option gamma (a topic we covered during yesterday’s livestream), the future of volatility, or our portfolio positions?

Send me anything you want to know right here – and you may just see your question answered in tomorrow’s Profit Takeover.

Until then,

Mark Sebastian


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