With the nasdaq back at June lows, its time to execute what I said at the end of this post – deploy some cash.
There are 3 opportunities I see today: V, AMZN, AAPL, and the way I decided to play them this time is a bit unusual, especially when looking at the rest of my portfolio.
Ill start with V:
With visa trading at $175, firstofall its at its YTD lows:
But looking on a 5Y timeline, its actually around 3 year lows, except for the short blip to $150 in March 2020 when the market imploded for a month and then recovered new highs within another month (im exaggerating but you get the idea):
So assuming the economy has improved/expanded since mid 2019, this is a great opportunity on visa.
So I opened a 180-190-195 call butterfly; long 180 calls, 2x short 190 calls, 1x long 195 call which filled at $2.7:
The position outcome graph and probabilities is as follows:
So 62% probability for max loss which is the initial debit of 1350$, breakeven at 182.7$, possibility of max profit of 3650$, but realistic max profit of 1150$ at Oct expiration if V is above 195$. So basically a 50-50 gamble statistically relative to where we are today, but looking at the historical chart of V I would say raises the chances significantly. Either way, I stand to lose only my initial debit, something I am very comfortable with, and honestly I would happily double (and triple) down on this if V does go down towards 150$… Keeping my fingers crossed for that one.
Disclaimer – In addition to this new position on V, I also rolled a short put position I already had on V down and out (net credit 2400$), and also opened a 175-170$ DC bear put spread last week also Oct expiration (net credit 675$), so these are my executed V trades in the last 10 days:
AMZN – Now back at $115, but still my largest “holding” by far (123k$ of margin vs 75k$ margin req for tesla my next largest “holding”, followed by GOOG, MTCH, V with 35k$ margin req), I wouldn’t mind opening another small gamble on AMZN, but not looking to increase my margin req on it. So here I also chose a call butterfly position:
Same deal as the V so not going to re-explain everything here. If its not clear, ask any questions in the comments.
AAPL – I’ve been looking to increase my exposure here for a while, but didnt fine the opportunity. Down almost 5$ today, I figure I might as well take advantage, so I was a bit more agressive here than on my other strategies:
1 – Short 140$ November put.
2 – 145-155-160 call butterfly.
The short put is to “tempt” apple to go down towards 140, and if that happens I will be happy to double and triple down and out, in order to establish a more significant position in AAPL (currently just under 25k margin req in my portfolio, and would happily increase that 4x). The call butterfly is the same as the others, debit of 3$, max value at expiration 10$, realistic value above 160$ – 5$.
Other than those new positions, I rolled and doubled down my 1x short put positions on ADBE, FDX, and META last week, even though I was looking to close them. This sounds counter-intuitive, why increase a position you’re looking to close? But doubling and rolling lowers my entry price, and honestly I think there should be at least some type of bounce off of June lows, and even if not, I’m a bit under-invested so I feel comfortable leaving the positions to decay and will follow along looking to close them.
Just while I wrote this post the nasdaq turned around from 0.3% red to 0.5% green, with my porfolio starting the day ~1700$ red and now 4600$ green so the timing was definitely lucky (or was it skill?).
We’ll see what October brings, but if its anything like July or August, we stand to make a lot of money.
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