Game Plan for Tommorrow 6:30am PST 9:30am EST
Dear Subscriber,
OK it's game time in the morning. I slept in just a little bit yesterday and it cost me serious short term trading profits...and I am still pissed off!
Despite Jimmy Cramer warning his CNBC audience tonight that "the history of these SPAC conversions is a big whoosh up (DKNG SPCE etc) and then a whoosh down, VTIQ/NKLA shares are trading up in the aftermarket roughly $35.
FOR THOSE of us who hold short term options with serious big-time NKLA profits, here is what I will do with my personal and managed accounts.
1) Memorize this chart. We have had two "whoosh ups" since we have owned VTIQ--both hit $38 and then whooshed down. Again...when VTIQ morphed from a SPAC to a cult stock, and it now trades like a cult stock (SEE TSLA for definition of a cult stock).
I, for one, am a huge fan of both NKLA and TSLA but I invest/trade to make stupid money not join a cult.
Thus we have to assume that we will see a whoosh up to $38 ish in the first 5 minutes into the open. If Jimmy Cramer (I call him that because we were friends for years until he got fired from Fox News and I replaced him on HIS show that became the Bulls and Bears--from which I got fired from 14 years later but that is another story).
Action to Take: Look--What I AM looking to do is sell some serious CALL option premium on the underlying shares we own on that whoosh. I do this because WHEN I sell serious call option premium--like the last two times...I LOWER my cost basis on the position. It is called "position management"--I learned the concept well with my first hedge fund in 2001.
BTW--I know a LOT of you have VTIQU units--but in the morning you will have NKLA shares and NKLAW warrants ok?
Here is the chart of the last melt-up aka yesterday.
So for the non-technical analysis junkies, here's the deal:
1) We are looking for the RSI (relative strength) to got 80+--that is the GREEN blob at the top of this chart.
2) IF NKLA on its first day of trading in the first 5-10-20 minutes trades UP to $38 or heaven forbid higher...please...WE SELL the rip!
That means (in my world) I SELL $40 June 19 call options for STUPID premium (like $5 a share) and assume a whoosh down.
BUT...I only sell 50% of the shares I own (a ton btw) because these whoosh's in VTIQ/NKLA have TWO whooshes...and the second whoosh is like Pickett's Charge at the Gettysburg. That 11:00 whoosh is the day trader's with a metaphorical Gattling gun...they is taking scalps aka day trading profits...they are not investors ok?
Why does this happen you ask?
Remember, as a Millennial/Gen-Z cult stock, these young folks go on their iPhone and place market orders for the next day. They love the idea of companies that are doing important work to save the world from melting down in 2050 (when I am chasing a golf ball around a small golf course I hope) That is the first whoosh--market makers in this stock are buying $10M condos in NYC and Chicago on the vig (the profit) they make on Millenial cult stocks like NKLA every day.
Then from 10-11 am NKLA comes back a few dollars on the profit-taking and the FOMO buy the dip. They have no idea that this behavior is NOT an anomaly but now a behavioral algorithm that the momentum trading bots already mimic.
So MY game plan is to sell as many $40 or $44 June 19 Call options as I can on these two Whooshes (now a noun and verb).
If that is NOT your game, no worries.
I just want the All-Accessors to understand what I am doing and why in the morning.
VTIQ has been an incredible six-figure and seven-figure gift for many of us...who knew it would become a cult stock.
Cult stock trading is a very RARE event--and I want you and me and my managed account clients to make STUUUPID money from this rare Unicorn.
See ya in the morning.
I will be the dude selling June 19 call options while snorting Starbucks triple expressos.