Today’s Impact Money Trade
Palantir Technologies Inc. (NYSE:PLTR) is my Ford of the software industry. It’s a stock I love – but it doesn’t love me back.
I’ve been waiting for this thing to make a run above $30, a level it hasn’t been at since February, and a level it just can’t seem to breach:
PLTR, Feb-Oct 2021
What can I say? I love this name, and I won’t do anything. This Money Morning LIVE viewer honestly said it best:
But finally, it looks like I’m not the only one hooked on PLTR. Check out this big-money buyer:
This trader bought the November 25 calls and the November 25 puts 18,600 times, creating a big-money straddle that’s betting on a move either below $23 or above $27.
And don’t act too surprised, but I agree. I think PLTR is finally ready to move.
The straddle seems like a fool-proof trade, right? It profits whether the stock goes up or down.
But there’s one major flaw with this trade – something that could cause this big-money buyer to lose millions.
If you want to mimic this trade, don’t do it with this straddle.
Here’s where this straddle loses – if the stock does nothing.
Sometimes, stocks don’t move. If PLTR hangs out between $24 and $25, then this trade just sits there losing money until expiration.
My biggest losses aren’t from when the stock moved the opposite way. They’re from stocks that don’t move – when volatility gets sucked out and my trade just decays.
That’s not fun. And it’s why I’m not looking to piggyback this PLTR trade with a straddle.
I want to sell the November $21 or $22 puts here – if PLTR goes up, then we can collect the premium and be on our way.
If it ends up going down, then we can take delivery, owning the stock at a discount.
But that’s not all I’m interested in.
We can use the premium from those puts to finance the $27 or $28 calls. This way, we can also take advantage of an upside breakout…
Creating a pretty nice risk-reversal trade.
The top three stocks on my Watchlist today come from wildly different sectors – but they’ve got one key thing in common…
They’re all poised for a profit.
- Verizon Communications Inc. (NYSE:VZ)
VZ has had a terrible chart… until they reported earnings yesterday, and got a big breakout:
VZ Sep-Oct 2021
Vol is dirt cheap here – and as you can see, the HV, represented by the red line, is above the IV, represented by the green line.
This is a beautiful asymmetric risk profile – and the November 19 $54 calls are only 50 cents.
If we get a value area breakout, those calls have potential to jump to $1.50, handing out a 200% profit in less than a month.
These are the kinds of trades we do every single day in the Profit Revolution live room. Just this week, in fact, a 39-cent recommendation on FuelCell Energy Inc. (Nasdaq:FCEL) turned into a 129% winner after only four days.
One trader, Tammy T, actually managed to make 250% herself.
“I have been in a few of these trading subscriptions over the last 20 years,” she said. “And none of them were at the same level of Profit Revolution. This is the best investment I have made for my financial future.”
Want to join her and get in on more asymmetric recommendations like this?
Give my team a call at 877.212.9163 and they’ll tell you exactly how.
- Campbell Soup Co. (NYSE:CPB)
Options in CPB are incredibly cheap right now.
Now, the company has some issues with cost, but the technicals are strong here. The 200-day moving average (MA), represented by the blue line here, is all the way up at $46:
And I think we could make a run at that mark ahead of early-December earnings.
That’s why I’m looking at the November $42 calls for about $0.60 on CPB right now.
- Boeing Co. (NYSE:BA)
When is Boeing going to move?
That’s the question I’ve been asking myself this week. The manufacturer has been stuck in a 10-point range for a while, and it’s got to be close to a breakout.
Even with earnings coming up next week, IV isn’t that high. And heading into that report, the November $220-$235 call spread looks really nice as an inexpensive play on that upcoming breakout.
VIX Traffic Light
With the market down today, the VIX is slightly up. But futures remain in a nice, steep contango. And even though we’re high, the SKEW remains low. I’m still looking for a sub-15 VIX this week, and there’s a real chance we can get below 14 by the end of the month.
Once that happens, we can start preparing for a rough post-Thanksgiving sell-off.
December is sneaky-volatile at the front of its month. And this December could be even worse with the supply chain issues we’re seeing heading into the holiday season.
Get ready – and be on guard. A month from now, we’ll be prepping for a potential sell-off like we haven’t seen for quite some time.
And I’ll tell you everything you need to know every day, right here in the Profit Takeover.
Founder, Profit Takeover
October 21 2021