Warning: Stay Away from BITO
Stay Away from BITO
Yesterday, the brand-new Bitcoin ETF, BITO, had one of the best launches for an ETF ever, trading 27 million shares in a single day:
But if you’re one of the buyers of those 27 million shares, then BEWARE. BITO is an unmitigated disaster.
The same kind of structural problems that exist for VXX and UVXY are in play here in BITO – the ETF is going to be trapped by contango.
See, Bitcoin futures trade at a premium to the cash. A lot of traders actually do a well-known carry trade, buying Bitcoin and selling futures to collect around 2% a month – a trade that allows them to take in anywhere from 10-15% in premium over the course of a year.
On a day-to-day basis, BITO will move with Bitcoin. But over the course of its life, the futures term structure will drive this thing to massively underperform whatever upside performance you see in Bitcoin.
So, let me just tell you – do not buy and hold BITO. This is exactly how the big boys on Wall Street – the guys at Citadel, at Goldman Sachs – beat you up and take your lunch money.
But that doesn’t mean you can’t profit off of it at all.
This where options come into play very, very nicely.
Options were listed on the BITO today. And I’m about to have some fun…
Quick, short-term calls are the only way to go bullish on BITO. But we can also go bearish with puts, trade strangles, and sell premium on this thing’s high volatility.
And that’s exactly what I’m going to do in my Profit Revolution live room.
This is a huge opportunity to trade cheap options – and I can’t wait to dive in.
Learn how you can get all of my BITO option recommendations – I have a feeling we’ll get started this week! Give my Profit Revolution team a call at 877.212.9163.
Mark’s Watchlist: Earnings Edition
We’re right in the thick of third-quarter earnings, and I’ve got some pre- and post-report plays to share with you today on these four stocks.
- CSX Corp. (Nasdaq:CSX)
CSX reports earnings after the close today, and I’m watching closely – because I think this thing is going to $40 a share, and this afternoon’s report could help get it there.
Of the major rails, I think CSX is the best in line – and it’s in position to win this afternoon.
- Tesla Inc. (Nasdaq:TSLA)
Arguably one of the biggest reports of the third-quarter season will come from TSLA. Remember when I told you about the earnings straddle? It’s essentially the market’s expectation of how much a stock will move after its report.
And according to TSLA’s ATM straddle, the market expects a big 5% move in the stock on earnings tonight. Keep an eye on this one.
- Draftkings Inc. (Nasdaq:DKNG)
DKNG isn’t scheduled to report third-quarter earnings until early November, but I’m bullish on this name ahead of that report. I think this thing could hit $50 before it even releases earnings – and once it does, well, it’s going even higher from there.
- Ulta Beauty Inc. (Nasdaq:ULTA)
ULTA got absolutely hammered yesterday, shedding $45 in a single trading session after a disappointing forecast:
But before that, it’d been on a tear. I’m looking for a dead cat bounce on this name, and I’d like to see it back above $375 per share.
Want to take advantage? Check out the October 29 $365 calls for a quick profit on this beauty stock.
Today’s Impact Money Trade
The last time Pinterest Inc. (NYSE:PINS) reported earnings, it was July 29 – and the stock got crushed:
PINS, July-Oct 2021
PINS is set to release its third-quarter report a week from today. And this big money trader has high hopes:
We’re looking at a collar trade here. Essentially, that means that a trader buys a put against a long stock position, and finances that put by selling a call against it.
In this case, we’re looking at a bullish forecast on PINS. And I don’t disagree. If PINS reports positive numbers next week, I could see it shooting to $65 per share or higher, especially considering the beating it got last season.
But big money is pouring into some post-earnings plays as well today. Check out this call spread on Delta Air Lines Inc. (NYSE:DAL), which reported earnings on October 13.
This trade isn’t ridiculously bullish, but it is bullish. DAL opened at $40 this morning, and this trader is looking for it to make a run back above $43.
Honestly, the whole travel industry got so slammed over the last few weeks that I think it’s time for a bounce here as the bottom feeders jump into stocks like DAL.
I gave you two impact money trades here – and I’m looking to piggyback both.
First up, PINS. I’m looking at the November $57.50 – $65 call spread here, which will return a nice profit if next week’s earnings report sends the stock over $65.
Next, we’ve got DAL. I’m looking to build a similar call spread here, buying the November $42 calls and selling the $45s for a little less than $0.60.
VIX Traffic Light
VIX futures expired on the open this morning – meaning we’ve got a new front month future to watch. That said, however, today’s light is still red.
Expiration gives us the opportunity to make some nice, quick-hit profits. This week, in fact, I dropped a bonus VIX trade in the Profit Revolution live room that was worth a dirt-cheap 10 cents at the time.
And there’s more where that came from.
Give my team a call at 877.212.9163 to learn how you can join the Revolution today!
Founder, Profit Takeover
October 20 2021
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