Samwise Quick Reference Handbook
To streamline our daily blogs and conserve space, we’ve organized key resources into a convenient, collapsible dropdown menu below. A sort of Quick Reference Handbook if you will -- as our friends in aviation might call it. By clicking the menu below, you’ll have qu...
Please login to view this page.
are we also going to close out the NVDA 150 covered calls on the oversold pullback?
Maybe. That might be a good idea. The point of those calls was to protect our long-term investment in our Nvidia leaps. But we might do that and then look to sell covered calls at a higher level on the rebound. It will require a very high level of confidence in a Nvidia near-term bottom.
Notice that when the market has a correction, Nviida is likely to drop 20-25%. So held long enough those covered calls are likely to go to $0.00. No matter where Nvidia ultimately tops, the overwhelming probability points to those calls eventually going to $0.00.
That’s because September 19 is 116 trading days for the rally. That would be a record duration rally. The QQQ is very unlikely to reach 116 days. AND EVEN IF. EVEN IF it does reach 116 days, and we’re forced out at $159.40, the market would then sustain a massive correction within the next week or so anyway.
It doesn’t matter how you look at it, the September 19 covered calls are extremely likely to EITHER close at $0.00 OR force us out at $160 giving us an opportunity to buy back a much much lower level anyway.
For example, suppose Nvidia runs to $180 in late July. The correction begins as expect, Nvidia is going to drop 22-25% between July and September. From $180, that’s $135-$140 at the lows. If we’re trading at $135 – $140 in late August, those $150 calls are done.
If the rally somehow extends to September and we’re forced out at $160 ($150 + $9.40 = $159.40), Nvidia can run all the way up to $200 and we’d still be able to buy back below $160 on the next correction.
And think about what that gives us in return.
If Nvidia closes at or under $150, we get a $9.40 reduction in cost-basis against our NVDA Dec 2026 $100 calls we bought at $37!!!!!!
That’s $37 – $9.40 =$27.60
We’ll have reduced our basis by 25% in a solitary covered call trade. Like the risk reduction we get from that is massive.
And all that is required is patience.
So look, there could be a window to trade out of them. If Nvidia pulls back to $140, there’s a window. Especially if it’s oversold. But if we’re wrong, we lose out on the massive coverage and risk reduction.
We’re still a year and half out until expiration and between now and then, we can easily reduce our basis to $0.00 if we stick with these types of trades.
The key is to recognize the point at which we’re at froth. And really that’s where Nivida is currently at. At $150-$160, there isn’t a lot of upside in Nvidia at all. $200 is the absolute ceiling for the immediate long-term future (1-year). And if that is ever attained, you can expect a major correction down to $150 anyway. The point here is not a lot is really lost ever being forced to close out Nvidia at $160 as you’ll always be able to either buy it back at $160 or substantially below that point in the future.
if we’re forced out of Nvidia at $160 come September, there will be a point in the not too distant future where we could buy it back at $160 down the line (giving us theta decay advantage) or way below that price.
So then you have to ask yourself, is getting $9.40 cost-basis reductions worth that risk of being called away at $159.40. I think it is. For the Arryn portfolio, it definitely is because we’re taking $9.40 out of the capital cost equation which drastically increases the chance of success for the portfolio.
For us to trade out of it, we need a clear defined bottom. We have to feel very confident that we can re-sell them at a higher level. That’s the standard for closing out the $150’s.
—–
Based on all of the analysis we’ve done regarding corrections and their timing, we’re sort of in a zone where we want to bleed off time. Our gains are capped right now because the risk of a correction is very high. So we’re intentionally capping our gains and in return we get a lot of protection. That’s because the risk-reward favors bleeding out that time. The upside in the market is very limited at this point.
Yes, there’s some risk of a parabolic run happening. And during the next pull-back we may address that using near-term calls or call-spreads. But overall, that risk is still very low.
We’ve only seen it happen ONCE before. Just that one time.
Key Point: It’s worth the risk to cover them if Nvidia reaches deeply oversold on the hourly. Deeply oversold will lead to an inevitable strong rebound correction or not. That’s a big sign that it’s worth covering. Even in the Feb – April crash, you saw that quite clearly. Any Nvidia oversold set-up needs to be bought. So we’ll cover it if Nvidia pushes to a 20-25 RSI on the hourly.
Any thoughts on Tesla? it’s at 300 again? Obviously not now when the pullback might be coming but maybe after?
I’d like to see it push down into the $280’s. If that happens, we may trade the common stock on it. It’s oversold, but price-wise, not low enough. I don’t like the double-top it has effectively formed by penetrating deep into the $300’s and then failing to hold the $300 level. that’s twice now during this broad rally. Not a great sign.
So we need deeply oversold conditions to trade it. It’s oversold right now. But I think down near the low $280’s will set up a trade. Same situation. 30-point upside. If you buy leveraged common stock you get 20% upside on a near-term trade. But we got to wait for that to develop more. I watch it closely every day. I’ll post on it the moment I feel like a trade set-up is there on it.
Wow, was expecting a pullback but didn’t expect it to (potentially) happen all in one day
Well I doubt it will happen all today. We’re only down $5 right now. Our expectation is for an 8-10 point pull-back total. So $148 is sort of the target. We really should see it drop down to the high $140’s at a bare minimum.
Typically these pull-backs do happen over a period of only 2-5 sessions. The pull-back we’re seeing right now isn’t out of the ordinary by any stretch and it’s defiantly in-line with the trend. Nvidia could still be on a bull run is the point. The pull-back isn’t so big that it derails anything at all at this point.
Ideally, we’d like to see Nvidia reach oversold conditions on the hourly. If that happens, it’s an easy 10-20 point trade to the upside.
There was a time when EVERY INSTANCE of Nvidia reaching oversold hourly lead to a 20-point minimum rebound. We saw that during the late fall and early winter period. So oversold would be nice.
We’d probably close out the puts and buy the $150 calls in the trading portfolio. Maybe cover the $150 calls we’re short in the leaps portfolio (depending on our confidence).
It’s weird how I am happy to see the market red. Actually, the hedging strategies here have been a huge eye opener. You worry so much less about the market fluctuations when you have a hedge in place. That makes you less prone to making bad trades out of fear.
Yeah so look. I’ve been doing this since the 1990’s and have never been anywhere near as successful at investing as I am since I started taking hedging very very seriously. We’re talking every investment no matter what. 10-12% allocated to hedging when buying leaps. It’s worth the protection when you consider that leaps are purchased with a 100% return target in mind.
There was a period when I’d hedge out half my trades and would get whooped on those trade I didn’t hedge.
The key is to always be hedged and to focus efforts on long-term investing. Short-term trading is a lot harder to hedge and has a very narrow window. It’s incredibly difficult to get trading right.
Take the Arryn Portfolio as a huge lesson on hedging practices. If there’s any value in this newsletter, it’s in the lessons that can be learned from hedging out risk. Nearly ALL of the profits we’ve generated in Arryn can be attributed to hedging. IN fact, at least $82k of the QQQ’s profits was directly generated though hedges. We have $72,227 in realized gains and MOST of those gains are from hedges. The profits we have in the June QQQ calls only exist because we generated $42k in hedging profits that we then used to buy the June 2027 calls. No hedge. No June calls.
What’s more, the Arryn Portfolio WILL outperform all other strategies here. It will beat Baratheon and Targaryen even if they both started delivering one hard hitting trade after another. Long-term, Arryn will beat then out and produce a massive percentage gain. Consider the following:
The Arryn Portoflio is likely to eclipse the $1 million mark at some point in the next 24-months based on a much slower return rate than this year. We started at $100k less than year ago and we’re sitting at $250k (150% return).
We’ve produced 150% returns in less than 11-months time At a lower return rate of 100% between August 2025 and 2026 and another 100% between 2026 and 2027, the portfolio goes north of $1 million.
That’s 10x in three years time. And all of that will have been hedged out from the beginning and the entire portfolio could have been done with size. This could have been accomplished with a $50 million portfolio for example. Someone could have taken $50m and traded it un to around $500m before running into liquidity issues.
The key is to view the market from the perspective of capital preservation risk and opportunity risk and to hedge out both levels of risk. That’s the key.
Taking one sided bets is a recipe for disaster because eventually you end up on the wrong side of the wrong trade and it’s over.
Whereas if every investment is approached with an appropriate level of respect for risk that things don’t play out in your favor, you’re able to mitigate losses effectively.
Consider what happened in February – April. We didn’t expect a 25% correction. It wasn’t in our vision at all. But all three leaps portfolios came out strong because they were already well hedged going into that correction.
Just like we’re doing right now with the June $500 puts. There’s no expectation at all that we’re going to see anyting larger than a 12-14% correction.
But if something much much larger happens, all three portfolio will end up with gains! If the QQQ falls 30%, Lannister, Stark and Arryn will go up in value from where they are today.
Why because we’re always perpetually hedging out the risk of a 30% collapse especially after the market has rallied 30%. That’s what the June 2026 $500 puts are all about. WE’re not buying them to hedge out a 12% correction,
We went through the same exact process in December – February. The very last trade order we put in on Arryn ahead of the February correction was Trade #11 on February 3:
11. Buy To Open NASDAQ-100 (QQQ) January 16, 2026 $500 Puts @ $27.75 X 4 Contracts made at 12:05 PM EST on February 3, 2025.
We bought 4 contracts in the $500 puts costing us $11,100. The portofio was worth around $160-$170k at the time. So that was about a 7% position taken in January. This after we sold covered calls:
5. Sell to Open NASDAQ-100 (QQQ) Feb 21, 2025 $530 Calls at $11.00 x 7 contracts made on December 3, 2024 back in early December. Just as we’ve sold the September $540 calls here. That’s a $7,700.00 premium sale.
We also bought puts in December as well:
7. Buy to Open NASDAQ-100 (QQQ) January 2026 $450.00 Puts at $14.91 x 4 contracts made on December 18, 2024. Cost us $5,964.00.
The point here is this. We did these things with little to no expectation of a market crash. These are things that must regularly be done during rallies to protect profits. And it has to be done every time.
In the end, we sold those Jan 2026 $500 puts for $85.50. That’s $23,100 in profit on a $11k position. We sold the Jan $450 puts for $56 generating a $16,436 in profit. That’s a total profit of $40k on those two small positions.
And remember that $40k allowed us to buy the June $500 calls. Those calls cost us $34,000. Had we not bought the puts to hedge, we wouldn’t have been able to buy the June 2027 $400 calls for $34k. And we’ve made $42,200 (as of today) on those June 2027 $400 calls.
That’s $42k + $40k in profit that can be attributed to our decision to pay $11,100 to buy the Jan 2026 $500 puts and $5,964 to buy the Jan 2026 $450 puts. $16k was roughly a 10% position.
We generated $82k of our $146k in profit due to those hedges. No hedges, no $82k in extra profit generation. We’d be up only $64k on Arryn right now without those hedges.
And that says nothing about the Apple and Nvidia hedges and other covered calls we’ve sold.
Hedging is THE KEY to success. It’s the whole ballgame.
Damn you are firing me up
I really really hope these leaps portfolios are let around a few years. As a young investor who as seen the market for no more than a year the prospect of a lifetime of leaps portfolios is incredibly attractive. Fingers crossed Sam Weiss sticks around a bit!
Same, generational wealth here we come!
Sam, by learning & applying these hedging strategies from you gave me a very very good night sleep no matter how the market goes.
Before this when I was investing in only one direction, I would be worrying “what if the market goes this way or that way”
Thanks alot!