Transcription
In this video, I'm going to be talking about the markets and three stocks I'm buying right now. One of them I believe is providing the strongest opportunities with a safer risk profile. The other two I believe are providing leaps call option opportunities. So, I'm very excited about this, and I'm going to show you exactly what I'm doing this week to prepare for these opportunities.
Now, remember, this is not financial advice. I'm just sharing what I'm personally doing for educational purposes only. Results may vary.
Now, let's take a look at the account. So, as you can see, we hit a new all-time high in the account. And if you do want to see me hit my 8-figure goal, go ahead and be subscribed down below by clicking the subscribe button if you want to follow me along my journey. And also, if you get any value out of this video, please hit the thumbs up button. I would greatly appreciate that, and I appreciate you being here.
Now, I'm not the only one doing it. As you can see here in Options Trading University, my private mastermind, we have clients that are posting their inspiration today. As you can see, some wins that clients are posting. Obviously, results vary month-to-month and are based off different risk profiles and account sizes, but I love it when the clients share this inspiration for others to see. Um, so tons of those. And if you do want access to my trades and my leaps, entries, and exits, that will be at the top of the description down below. I also do give away free trade ideas on my Instagram and my free newsletter, which are also both down in the description. So, be sure to be subscribed to both of those.
But let's go ahead and talk about the markets. Okay, this week we actually do have something that could move the markets that I overlooked last week. All right, Fed Chair Jerome Powell is speaking at the Jackson Hole economic event on Friday. Okay. Now, in this event, usually he talks about where the Fed's headed with interest rate cuts. So, if we take a look at the CME Fed Watch tool that shows us the odds of a rate cut, they have gone significantly down from last week. It said we were getting a rate cut, 99% chance in September. This has gone down to 83% for September. So, uncertainty is unfolding as far as what Jerome Powell is going to say on Friday.
Now, he could say one of three things. He could say, "Hey, for sure the rate cuts coming. Data looks good." Right? He could say the second thing, which is basically what he's been saying this whole time. "Oh, well, we're going to wait until the data comes in, and we're just going to go based off that." And third, he could say, "No, we're not going to do a rate cut in September." Obviously, that would be really bad for the markets, and that would send the markets downwards short-term, okay, which would be a wonderful opportunity, but I don't think that one's going to happen. Okay? I think that it's going to be number two. He's going to say, "We're just going to wait and see on the data, and we'll make a decision when the time comes."
But what the markets are pricing in is a potential double rate cut for October. Okay. So that's a little bit different. The odds are, you know, 90% there of a double rate cut between 65% on the quarter basis point and another quarter basis point, 34%. So yes, the rate cut odds are going down slightly for September, but for October, we may just get more aggressive cuts. Okay, and that's good for the markets. All right.
Now, if you take a look at this historical US equity performance after the first rate cut chart, okay, given rate cut cycles typically commence to stimulate economic activity in a slowing economy, investors may be cautious about stock returns during this time frame. However, looking at the history may provide some comfort. Since 1980, there have been a total of 11 rate cut cycles. And 12 months following the start of a rate cut cycle, equity returns as measured by the S&P 500 have averaged 14.1% in the given year. Okay? So, we typically see the markets go up after a rate cut cycle. It's usually not just one cut and done, right? We saw a flurry of cuts last year. Now this year, we may see another flurry of cuts starting, and that stimulates the economy because businesses can borrow at cheaper rates, consumers can borrow at cheaper rates, and money moves around more, and that money enters into the markets. So that is my expectation kind of long-term in the next 12 months horizon.
So, how am I playing that? Well, I'm going to talk about three stocks today specifically that I'm playing. In the event that we do get that rate cut in September, Fed Chairman Jerome Powell says this Friday, "Hey, we're going to do the rate cut." You probably expect QQQ to kind of gap up, uh, past the 590 area. Okay, so that's kind of my opinion. I think we're going to gap up past 590 on really good, you know, hey, Fed Chairman says we're cutting for sure in September.
Now, what's most likely going to happen is he's not going to say much of anything, and we're going to be pretty range-bound. In fact, I do believe that we could pull over to this 569 area on QQQ for a nice little relief dip. Okay. Um, to kind of reset the markets. Uh, yes, we could go down to this 566 area. That would be also a nice place for an entry. Okay. Um, and given that that happens, right, because that's that's probably more in line with what's going to happen. That's kind of where I'm seeing the markets going. I think it's going to cool off in the next couple weeks, being that September is usually a negative month. So, I don't think we're going to just head straight up from here. I think we're going to have some sort of a small pullback. VIX may spike up past 15, past 16, hopefully. Right? We got a nice little spike yesterday, or actually this morning, and we allocated some cash.
But if you aren't looking at the VIX fear and volatility index, you should be looking at it because right now it's saying that there's not much fear going into this Friday's event. Okay, so VIX 14 is telling me that. Let's look at the VIX cash allocation levels right now. The VIX is between 12 and 15. So technically, I could have, you know, 40% to 80% of money on the sidelines, which I don't. I have about 16% right now. So, I'm very aggressive, right? Um, because I'm actually more bullish on the outlook. Yes, we could get a small dip, and I do have cash for that dip, but I I think after that dip comes, we are going to head, um, higher after that. Okay, so yes, maybe a little spike here, 16 to 18 on the VIX this Friday, and then we resume upwards on QQQ. Okay, so that's where I think the market's headed.
Now, let's talk about the first opportunity. This one I believe is providing the strongest opportunity as far as cash-secured puts go. So, Sofi Technologies is a wonderful company. They had amazing earnings, right? PE ratio is fairly low for an online banking company in the AI banking sector, 47, right? And cash flows are pretty strong, margins are pretty strong. Okay?
Now, if we take a look at how this company has performed as far as the stock chart goes, this is a wonderful company for cash-secured puts um and running the wheel option strategy, which I do because if you go back a year, year and a half, it is upward trending. All right. Now, we just hit, you know, 24.43 today, which is pretty good because we've kind of rallied from this 22 area that we were in just a couple days ago. Um, I think that, you know, I think that SoFi is headed towards $30. And that's just my take. Now, we aren't overbought on the RSI quite yet, and volume is picking up. So, from what I see, this is a wonderful cash-secured put opportunity considering that the VIX is so low and premiums in the options are low right now.
So, if we go to my portfolio, and remember, this is not financial advice. I'm just sharing what I'm personally doing. Okay, what I did was I moved all my 19 and a half, my 20 puts, my 21 puts, and I moved them up to 23. So, the size of the current position in SoFi is 144K. It's my second biggest position. All right, so what I did today is I went to the options chain. All right, and I said, "Hey, I'm going to go out." I went out 11 days just to get more August premium. But if I wanted to establish a new position tomorrow, what I'd do is I'd go out to September 19th, 30 days out, right? And I'd go to that 23 strike, which is a 34 delta, meaning if the stock, you know, has a the stock has a 34% chance of going below 23 by expiration in 32 days, and I'd have to buy 100 shares at $23, right? But I'd get paid 95 bucks. All right. Um, to basically sell this put option. So, the current ROI there, and that's based off of where the stock's at today, so it's not, you know, results vary, right, is 4.38% ROI. Okay, that's a wonderful return profile considering that the market's at all-time highs and the VIX is low. So, there's not much premium baked into these put options. So, I really like that strike, that specific strike price, 23 because if we look at this, uh, we look at the chart. All right, 23 is putting us about right here. Okay, which is pretty close to where the stock's at. But if you go from all-time highs, which is the potential of where this stock can go, all right, that is about, you know, an 8.8% discount. So, the stock would have to go down 8% 8.8% 8% for me to get a sign from all-time highs. From current prices, the stock would have to go down 5% in 32 days. Okay. So, I really like this stock, and that's why I continue to play it with such a large capital size because it's providing the returns I'm looking for, and it's upward trending in a pretty safe sector. Okay, so that is going to be the first stock.
Now, let's get into the second stock, which is a leaps call option opportunity, Meta Platforms. All right, Meta down on the day about 2% from all-time highs. Uh, let's take a look at where Meta is down from. Okay, so we're going to take a look here. And if we just draw this price range from all-time highs, we're currently down about, you know, 3.8%. So, not too big of a down day. But let's talk about it. Why is Meta going down? All right, couple things. Meta plans fourth restructuring of their AI efforts in six months, causing a little unease in investors, right? Um, basically, they split their AI unit into four different groups: Super Intelligence Labs, TBD Lab, which is short for To Be Determined, um, Products Team for Meta Assistant, and the Fundamental AI Research Lab. Okay, so they split up their AI, um, architecture and just how they're going to be going forward with their efforts in the AI space. Okay. So, you know, it's not too much of a, it's not too much news here, just kind of a headline, but, you know, the the stock went down. I think actually the stock went more, um, south because of this where they faced backlash over their AI policy that lets their bots, right, have inappropriate conversations. All right. So, that also took the stock down, and they're going to have to fix that, right? They're going to have to fix that. So, when they fix that, because they will, all right, that's going to help the stock.
Number two, they're releasing their smart glasses, the Hypernova glasses, potentially next month in September. All right, for $800, which is a low price point, and I believe that it will be a superior product to Apple's, um, Vision Pro, that just kind of didn't really take off. Of course, they did sell units, but Meta sold over two million of its, you know, um, Ray-Ban units, and these are going to be much better. These are going to basically have AI capabilities, AI assistant. Just imagine you're wearing AI glasses that just like these actually fit on your face. You It's not like goggles you're walking around with, right? And you're able to have an AI assistant there update you on your portfolio. "Hey, your cash-secured puts are coming close to premium. You should roll them up, right?" "Oh, hey, your next meeting is at this time." "Oh, hey, I have this, um, I want to cook dinner for my wife tonight. You know, you're in Whole Foods. You know, what should I cook?" Right? And having that AI assistant instead of on your phone, and having to take out your phone and talk into it or type with your fingers, you're basically seamless. So, I think that this is a huge move into AI wearables, which I think are the next kind of generation. Apple better be careful because if Meta does really get get these AI glasses dialed in, uh, then obviously my Apple position will probably be a lot smaller than it is today. Okay.
Um, so doing so, playing that, what I'm looking at Meta is I'm saying, "Hey, this thing is getting close to this mid-Bollinger band line here at 750, which was previous resistance and previous all-time high prior to earnings." All right, if we could get down there, I'm comfortable entering a leaps call option right here. Okay, knowing that yes, we could head down here and I'd be early, but I will ride it back up to, you know, this 800 area. Okay. And that will be the target. Um, yes, I might be a little late. It could go down and then back up, but this is the target, and I'm, you know, fine getting in at that moment. We have a bearish crossover on the RSI, okay, heading down towards the, you know, towards oversold levels, and a bearish crossover forming on the MACD. So, that's showing that the entry is coming close, and we could get this entry as soon as tomorrow. All right.
So, how I'm playing it is I'm going to go to the portfolio. As you can see, the Meta position, I have 149K in cash-secured puts, but this would be a call option. And I'm going to go out two years, give myself ample amount of room to be right. And I will probably buy, you know, the 65 to 70 delta, which is going to cost me roughly anywhere from 15K to 17K to control 100 shares versus 76K to control that 100 shares. It's a it's a large multiplier on my money. Um, and I have plenty of room to be right, especially in a company with a very low PE ratio. PE ratio is at 27. They earn tons of cash. Not really worried about it. So, that's the play for Meta. That's going to be the first leaps opportunity that I actually play on this stock, and that is going to be hopefully sometime this week.
Now, Palantir is going to be the second stock. Palantir down 3% today. It was down like 2% the day before and a percent the day before that. So, Palantir has taken quite a dip here, and I believe Palantir is a wonderful opportunity as well. If you look at their financials, I mean, the margins, blowout earnings, their last earnings, largest amount of net free cash flow, net margins were the highest. Cash on hand is still pretty significant. You know, almost a billion dollars. Um, this company is crushing it. And yes, while valuations may be high because you'll see a lot of articles like this one saying valuations are stretched to extremes, external pressures and industry shifts, government contracts are still the backbone. Yes. Yes. Yes. We've heard it all, right? Uh, this company is still in the in the first innings, right? Once the AIP platform gets adopted by all companies, which I believe it will, right? Because number one, theirs is the only one that actually has proven to work. And they go to these companies, large contracts, Walgreens, you know, we're talking huge companies, and they say, "Hey, this is how our product works. We'll show you for free." And once they show them and they could see that value add there, then they sign a huge contract, 5-year, 10-year deal, and that's recurring revenue for Palantir. Okay.
So, um, for instance, Palantir's AIP is enabling enterprises to deploy autonomous AI agents that drastically compress decision timelines and increase productivity not by percentages, but by multiples. Recently, Walgreens deployed AI-powered workflows to 4,000 stores in just 8 months. Okay. Um, as you can see, Palantir, Anthropic, and AWS can accelerate the underwriting process by 5x, and that's from, uh, investor day. Okay, so massive value there, and I think Palantir is just getting started, even though yes, the valuations are a bit stretched. If we look at PE ratio, we're probably in the, uh, yeah, 578. Okay, but we've seen it as high as 700 after earnings.
So, what I'm doing is I'm waiting for this stock to come down, probably an additional day. Ideally, I'd like to see it at this mid-Bollinger band line, like the 168 area, 168, 169. And yes, while I may be getting in early, it could definitely come down here to the one low 160s, maybe even the high 150s, right? I will ride it back up to all-time highs. So, that's the target. Yes, it could keep going down and then bounce extremely hard, um, back up to the 190, but we're going to ride it there for the long term. Um, bullish or bearish crossover on the MACD. So, this might this downturn might just be getting started, right? So, maybe we'll wait another day or two and wait to see if we get it at that 165 level here. Okay? And then we'll ride it back up.
Now, how I'm going to play it again, we'll go to the positions. Palantir, have the 167 and a halfs. Um, actually, the total position sizing here is 100,000 in cash-secured puts. We're going to go to the options chain. We're going to go out two years, Jan 15, 2027. And we're going to go ahead and grab the 70 deltas, which would be this 160 strike. Obviously, if the stock goes down a little lower, it'll probably be the 155 strike. We'll pay 5500. So, I'll pay 5500 to control 100 shares versus 70,000 or, uh, 17,000, right? Um, so that's going to be the way that I lever up my money to play Palantir to the upside. So, definitely waiting for that opportunity, and hopefully again, if Jerome Powell says something that pisses off the markets, then we'll get these opportunities.
But if you enjoyed this video, please give it a thumbs up, and I'll see you in the next update on Wednesday. Take care.