Samwise Quick Reference Handbook
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How long until we have a clear picture?
So as we noted, we need a rally up to $490 or a breakdown to $400. How long will it takes for the QQQ to make that ultimate determination, probably no longer than a week or two.
the QQQ isn’t going to trade sideways for 10 more days. It’s going to make a definitive move one way or the other soon.
„In this scenario, the QQQ does breakout above $470 and makes its run to $490. Total rally off the lows would be 22% which is inline with every other major sell-off like. In every sell-off like this one, we had a 20-27% immediate ensuing rally. No delay“
Doesn’t this statement invalidate option 2 etc.?
If an immediate rally of 20% should happen how could it then screw around for weeks here and then drop again and delay that rally be a month or so?
So we have two distinct scenarios. In one scenario, the QQq rallies to $490. If that happens, then scenario two is completely off the table.
That’s why they’re labeled 1.1, 1.2 and 1.3. We have 1.1 – 1.3 playing out if we rally to $490.
We have scenarios 2.1 – 2.2 potential playing out if the QQQ breaks down.
Those are the two broad possible scenarios.
One or the other is going to happen. We either breakout and run to $490. We’re going to breakdown toward the lows.
We’re unlikely to trade sideways for very long.
If we run to $490, then one of three things likely happens. One, the QQQ might just take off like it did after covid. Two, the QQq might pull-back to $460 forming an inverse head & shoulder and then breakout to new highs. Three, the QQQ might embark on LEG 2 of hte bear market.
In scenario 2, the QQQ doesn’t run to $490. Instead, it trades sideways , fails to breakout above $465 and then returns to the $400 area. If that happens, the QQQ either forms a double-bottom returning to $465 and ultimately breaking out to $528 anyway; OR the QQQ might fall to as low as $370 essentially resulting in the end of a small bear market or crash like Covid.
I know it seems like a lot, but it isn’t. The market is limited right now in more ways than it was when the 2nd leg down had occurred. That rebound up to $467 put is on a clear-cut course with clear-cut outcomes.
What price do you think NVDA goes to in these outcomes?
Well if the QQQ goes back to its highs, then Nvidia goes back to $150+. It’s all back to normal.
If we get into a bear market, there will be a point where Nvidia, Apple, Google, Microsoft will slow down and may outperform.
What tends to happen is these stocks will tend stop accelerate to their bottoming points sooner than the broad market.
For example, in the financial crisis, Apple fell to $115 a share in March 2008 even though the Jan – March correction was smaller in the overall market. we did haver the bear stearns collapse occur during that period. But the indices weren’t down anywhere close to the 40% declines we saw in some of the big names.
Then in the fall of 2008, Apple accelerated to its ultimate low of $78-$80 a share way before the market did. It got to a point where Apple outperformed. It would rally to $100 a share on the upswings and even though the market would make new lows, it would drop only back down to near its prior lows.
I expect we’ll see something like that here. If the QQQ falls to $250, it’s unlikely that Nvidia is going to fall back to $60 a share given its earnings capacity.
So I think Nvidia will weather it better.
If QQQ runs up to $470, where do you think NVDA will be, maybe $110?
you’re kinda finding that out right now. Nvidia is trading at $105.40 while the QQQ is at $463.62. So that sounds about right. It really just depends on how the stock is feeling that day. Sometimes Nvidia randomly way outperforms and other days it underperforms.
That being said, $470 is a significant line of resistance and so if the market makes that push, you can expect Nvidia to make a similar push as well. Even though $470 is only $6.50 away on the QQQ, Nvidia likely suggest to $110+ specifically because $470 is a big line of resistance.
So yeah I’d say $110 on Nvidia makes a push to $470. If the QQQ breaks out and runs to $490, then $120+ on Nvidia makes sense. Go past $500 again and Nvidia starts to make its march back to its highs.
If the market is at its highs, Nvidia likely rallies back to its highs as well. Those two things will likely correlate.
Thanks Sam.
Oof I think NVDL will be down to around 5 or 6 at that point. Probably time for me to figure out options so I can leverage
I can’t wait for todays reading
How does earning impact this? Can good earnings drive it higher, or are those already priced and market will do what it’s going to do regardless?
Earnings will drive the stock higher because it has been artificially beaten down. But it will really depend on how much Nvidia rallies into the report itself and the earnings environment. Generally speaking, if the market rally is back on and we’re in a generally bullish environment, Nvidia will go higher on earnings.
260$ QQQ. I am already broke, can’t be more broke right ?
The hedges would print big if enter a massive bear market though.
Hedging (as Jesse implies) is critically important. It cannot be overlooked. Our strategy does not work without hedging. We mitigate two types of risks by always remaining long and always hedging.
Everything we do here is based on the fact that we write off the risk of a crash or bear market via hedging and write off opportunity risk by remaining long at all times. If we don’t hedge, we can hold long positions because we can’t mitigate an INEVITABlE crash. If we don’t remain long, we end up missing one rally after another. You have to do both.
Here’s why hedging is absolutely required. Cannot be ignored. Suppose someone named Bob sold some assets during this downturn, wired their capital into their brokerage account and perfectly timed buying on Capitulation Monday. They buy the QQQ down near $403-$407 a share.
Let’s say they follow what we’re doing here and buy the June 2027 $400 calls at $85 a contract. Say they buy $100k worth. The QQQ rallies to $465 and Sam Weiss sells 12-15% worth of the June 2027 calls and uses the capital to buy the March 2026 puts.
But Bob think, I don’t want to waste $20k (12-15%) on hedging because it means less gains this year. The QQQ was down 25% already. Even if it eventually goes a little lower, it’s probably not going to be by much and the QQQ will probably recovery and go back to its highs way before 2027 anyways. So Bob decides not to hedge.
He decides to hold his 12 contracts at an $85.00 entry costing Bob $102,000.00. And now let’s say Bob’s right. The QQQ did in fact bottom out and it just so happens that the QQQ never returns back to its lows. Scenario 1 plays out and the QQQ rallies all year long and here we are now at the end of 2025 and the QQQ is trading at $600 a share.
The June 2027 QQQ calls are trading at $220.00. The March 2026 puts are trading near worthless. Sam Weiss by that point will have sold covered calls and likely purchases a new set of puts to protect the June 2027 calls. Chances are if we’re sitting at Jan 2026, the June 2027 calls will have likely been rolled foward to 2028 and a new put hedge will have been established at the Jan 2027 expiration.
Bob gets to January 2026 when Sam Weiss decides to hedge and figures. It worked out all fine this time, I’m not going to hedge. I’ll roll forward, but I’m not going to hedge.
So Bob takes his $264,000.00 position (up 160%) and rolls into the January 2028 $600 calls.
Shortly after this happens, the QQQ finally reaches a bull market peak in June 2026 at $640 a share before it sustains a real 45% bear market decline over the next year. The QQQ has bear market rallies, but it just goes on and on like 2022. The QQQ defines from $640 down to $307 a share. The January 2028 $600 calls drop from $100 a contract to $4.32 a contract. Bob’s $264,000, which had ballooned to $330,000 at the peak, and has now fallen to $11,000.
Now here’s the thing about hedging. If you hedge every time — like putting a seat belt on every time — you will hedge out the eventual collapse. It is 100% bound to happen. On a long enough time line of buying leaps, rolling foward, buying leaps, rolling forward, the market will eventually sustain a 2022 style bear market. And if you’re not hedged when it happens, it doesn’t matter how much you made in years 1, 2, 3 and even 4, it all goes away in year 5 when there’ sa bear market.
If you think, “oh I’ll just sell,” you open up a whole other risk premium you’re not considering. It’s opporutity risk. And that risk is literally 100x more likely to play out against you.
You are more likely to find yourself on the sidelines while the market skyrockets without you than you are to be long when the market enters a bear market. Bear markets happen far less frequently than the market going on a parabolic run like we saw in 2023 and 2024.
you hedge out opportunity risk by being long. you hedge out the eventual bear market collapse by hedging EVERY SINGLE time. Or as the website Zero Hedge with the relevant name states, “On a long enough timeline, the survival rate for everyone drops to zero.”
The point being made here is you can have 8-9-10 successful years one after another, but all it takes is that one bad decision and you lose it all.
So hedging? Critically important and every time. Everyone is bound to get knocked out if they buy leaps and don’t hedge.
This all applies to leaps and options.
It wants to takeout $470
Please go to 490 already