Mark’s Watchlist: Why I’m Staying Away from Cannabis
- Salesforce.com Inc. (NYSE:CRM)
CRM has lost almost 4% over the past five days – but now, it’s just a couple ticks away from touching it’s 50-day MA:
Once that happens, I wouldn’t be surprised if we’re at a level where we can bounce. Implied volatility (IV) isn’t particularly high on this name, and considering this is a $255 stock, the October $260 calls are a relatively inexpensive play at about $5.
I’d wait for CRM to hit its 50-day, and then boom – cash in on a call to play the bounce for a nice payout.
- Canopy Growth Corp. (Nasdaq:CCG)
Everyone thinks that Canada is going to be a huge player in the growth of U.S. cannabis. But I’m not so sure. I’m worried about Canadian drug companies like CGC. I mean, this thing is like a falling knife.
Over the past month, it’s lost nearly 14%. The past six? More than 57%!
It can be tempting to dive into a fast-falling name like this when there’s so much in the media about cannabis’ potential. But I’d be wary here – I’m not sure we’ve hit the bottom yet.
- Advanced Micro Devices Inc. (Nasdaq:AMD)
Before we get into today’s impact money trade, I want to give you a bonus big money name: AMD.
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We just saw a customer step in and buy the $105 straddle… 15,000 times. This is a trade that’s just looking for blanket movement.
With 31 days until expiration, this buyer is looking for about an 8% move in AMD. Now, this stock has been moving, don’t get me wrong. But it tends to fly up and down in the same range. It takes big runs from $110 to $115, then drops near $100, then bounces again.
This customer is looking for a big breakout – and there are a few ways you could piggyback this trade.
Me, well, I’m long the $110-$120-$130 call butterfly to try and take advantage of some sort of near-dated bounce in this name. You could also buy the bottom rung of the trade – the October $110 calls – outright. Or, you could construct a call spread by selling the $120 calls against it.
With a potential run to $120, these would make for a nice payout.
Today’s Impact Money Trade
Today, we’re looking at big money on a small-money stock – Ring Energy Inc. (NYSEAMERICAN:REI).
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This is only a $2.60 stock, but IV is absolutely exploding – and as you can see, call buyers are coming in hard.
The stock had a breakout day yesterday with 20X normal trading volume and an 8% pop. It’s since fallen from there, but you could buy the stock here for a cheaper price…
Or look at the December $2.50 calls for $0.55, paying an extra $0.15 for two more months of time than this big money trade.
VIX Traffic Light
Today’s VIX light remains yellow after a 5%-plus rally over the past five days.
The VIX is still trading above the September futures, but a big spread between October futures and the cash index has dampened any real gains in UVXY. We’d need a huge leg up in the VIX for these to take off, so for now we’re holding our put.
You can track its performance right here!
I just sent a trade recommendation on UVXY to my lifetime Profit Revolution members – and the next lifetime recommendation comes on Friday!
Learn how you can get on the list to receive it by clicking here.
Until next time,
September 14 2021