Updated: Feb 22, 2021
I do live trading on my Twitter and would like to post the real option trades that I am doing, and what my current watchlist is. Follow along on my journey to $1 million.
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Last week we experienced a small dip and a decent bounce back on Friday. Many people on the news and online are fear mongering about a crash soon to come. I personally feel that we are I the late stage of a bull cycle now that so many retailer investors are coming out to play, although with corona it could be different. I estimate a major pull back in 2022-2023. After discussing the new picks and notable mentions, I'd like to go over a basic hedging strategy for anyone that is nervous.
For more information on price targets, entry, risk, and timeframe, see the updated official watchlist.
Adding to Watchlist:
$NIO- In case you have been living under a rock, NIO is a Chinese electric car company. They have the lead as far as Chinese electric luxury vehicles are concerned in China. Take it from someone that lives in Shanghai - they are everywhere. Personally, I like the interiors of these cars better than Tesla and I think this is easily an $85-$100 stock. Start buying into long positions now and the next EV push should pay you nicely. Deep ITM LEAPS?
Target Price: $85
Timeframe: 5-8 months
$OZON- Ozon.ru is an ecommerce giant of Russia, like Amazon is to the US. Ecommerce will continually growing in Russia, and in my opinion we jump on this before it blows up more like Amazon or Jumia did. $OZON is trading in a parallel channel, and if it fills a gap at around $57 I will be entering then.
Target Price: $75
Timeframe: 2-5 months
$PLTR- Not only has Ark Invest been buying up Palantir during the dip last week, so have I. I will continue dollar cost averaging into my call option positions (Aug 21, $30 Strike). I'll be keeping my entry and target the same.
$WKHS- Workhorse Group is an EV manufacturer currently focused on manufacturing electrically powered delivery and utility vehicles. Recently $WKHS has dipped into and is near my 'Buy Zone'. With the Biden administration waiting to electrify all of the vehicles in the federal fleet, this company could be in a good situation to get a contract for USPS let's say. If that were to happen, there would be a buying frenzy. Since it is near my support, I'd like to be getting some mid - long term call options. I'll keep my target and entry the same on this one for now.
$DIA: Let's look at far OTM Puts on Dow Jones ETF. For me, this is more of an 'insurance policy' than it is an actual hedge, but it is so cheap that its hard to not consider. At Jan 22 expiration, the $95 put is only $30 right now. Spending a couple hundred, or a thousand, dollars on these could make you a lot of money if the market did crash. The question is when will it have a significant correction. If it is before Jan 22, these premiums will skyrocket. In 2008, the Dow lost half of its value. If something like this happens again based on increased IV and the strike not as far OTM, I estimate these would 20-50x.
For arguments sake, let's say the same thing happened this year as in 2008 and the Dow lost 50% of its value so $DIA dropped to $150. That puts our $95/$100 strike about $50 out of the money. Currently, $50 OTM is going for $1000. That is about 33x even with low IV of 25%. Assuming the IV would skyrocket if the markets were crashing and these puts would be in much higher demand, this could be higher.
If the market doesn't crash by Jan 22, you'll lose the money (some or all), but that is pretty much how 'insurance' works.
Let me know if you agree or disagree with my cheap hedge.
Note: Risk (1 out of 5) is my opinion of how risky the stock and these plays are; 1 being the lowest and 5 is the highest.
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