Samwise Quick Reference Handbook
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Sam, as an example, for the “Buy to Open Sep 2026 QQQ (500?) Puts @ $16 x 10 Contracts” in Stark, are those meant to be a 1:1 to long calls that will be purchased or are these portfolios being padded at all with additional puts that will be closed at the bottom of a correction?
Not necessarily. The way to think about it is that it will be AT least large enough to go to 1:1. We may reduce down ultimately on the drop.
There’s a good chance that we’re going to close out the Sep $600 puts on the drop. Here’s why. We close out hedges under extreme situations. I think this is going to be one such situation.
For example, we didn’t close out the hedge in teh September 2024 correction. We didn’t do so in the January 8% sell-off in the QQQ.
If we see a normal 10% correction, we probably won’t close them out.
But if the correction extends to 14% or something like that and the QQQ sees a 20-RSI on the daily, we’re going to close them out.
That’s because the probability of a massive bounce is enormous when the QQQ reaches a 20-RSI. There are no exceptions to that.
And I think this correction ultimately will go down that road. But if it doesn’t, then we’ll adjust the ratio so that the long position can generate sufficient profits without being suffocated by the puts. That’s where the reduction comes into play.
The idea is to be 1:1 with an equal number of contracts.
Hi Sam,
Currently, we have short term put spread positions in various portfolios. As you’ve outlined yesterday, there is non-negligible risk (1/10 times) of the upcoming correction prematurely ending once we reach 8%. In order to hedge against this we plan on starting allocations into our new long positions. However; I’m thinking we should ALSO do the analog to this and start trimming our short positions. Would that be correct?
Thanks!
So on the trimming of short positions and spreads, we’ll probably wait until 8% and then we might sell half. That will largely depends on near-term oversold conditions + 8% mark.
Like if we get down to the 8% mark and we’re deeply oversold on the hourly, we’d probably trade out completely.
It’s very situational. But I think the key is to wait for the 8% mark. That’s about $550 a share from $600.
Hi Sam,
As the correction is unfolding how do we manage the allocation plan towards our long leap position once we hit the 8% correction mark? Presumably we don’t want to go all in once we hit 8%.
For example, let’s say our targeted allocation for QQQ leap position is 100k. Just example numbers, but do we put 70k at 8% down, another 10k at 10% down, another 10k at 12% down, and the final 10k at 14% down?
What would be the allocation strategy that strikes the best balance between hedging against getting left behind on a premature ending vs. optimizing for returns? In order to optimize for returns you would want to allocate MORE as the correction progresses deeper and deeper, but if we don’t allocate enough at 8% then you run the risk of being under-allocated and left on the sidelines on the rebound.
Thanks!
There’s a time element too, if we don’t have indicators, just oversold for example, down 8% in a few days, probability is on the side of waiting, if its day 20 and still only down 8% that’s when you consider going long.
Patience. Have to let it unfold.
SO we talked about this a bit during one of the recent daily briefings. So it’ll a be a mix of things to consider when we’re down 8%. When we launched Stark for example, the QQQ was down 8% at the $500 level and we were nearing oversold territory. Those two things pushed to get long about 60%.
We then got long our remaining positions during the February sell-off. When the QQQ falls 6-7-8% there will also be other technical indicators guiding decision making.
How much we allocate at down 8% will largely be driven by those factors. There’s a good chance we’ll buy half of our intended position there. Then buy the rest on the slide lower.
So we might go 50% long at 8%. 25% long at 11% and 25% long at 14%. Then if we’re deeply oversold, we’d close out hedges and dollar cost average pretty significantly below that. Sort of how we did it in the February correction.
There are a lot of different variables at play. The 8% mark is just one such thing that goes into the decision making process of how much to allocate and when.
the remaining 50% not invested allows protection against the probability of a drop greater than 14% as in 2022 with 40%?
QQQ ramping
QQQ new ATH rally day 115
For the Nov 21 put spread, how is it $1.25? I’m seeing it trading around $7 and the Oct 31 550 around $3.50
The spread is trading at 1.34 right now and will likely be trading at 1.25 or lower if the QQQ reaches 600, which is when Sam plans to acquire them.
Sorry, I’m new to this how is it trading at $1.34? I think I’m looking at the wrong options
Look at the 11/21/25 options chain. 560, which we would purchase, has an ask price of 6.93. 550, which we would sell, has an ask price of 5.58.
So we would pay 6.93 and receive 5.58, leaving a net debit/payment of 1.35 currently.
ETA: Technically, the trade prices generally fall between the bid and ask, but I’m just using the same side of it as an example.
If you’re still confused, try watching this video:
https://www.youtube.com/watch?v=i0VmJUQP1N8
when were the 11/21/25 550 purchased?
For a spread, it’s all handled as one transaction. So you sell and buy different strike prices at the same time. I would recommend watching that video I linked to get a better understanding of the strategy.
We haven’t bought those yet. They are just on our watchlist right now.
We’ll probably look to buy them Monday on gap-up.
You’re looking at the individual puts. Not the spread. You should read up on credit and debit spreads before ever considering any spread related trades.
where can I look at the spreads? on questrade I can only see individual puts or calls
So there are a lot of brokers that allow you to observe spreads. It’s important to understand that spreads are a synthetic asset. While on the front end, you’ll see prices like $1.25.
What’s actually occurring when one purchases a spread is that they’re buying long one contract — say the QQQ $560 puts ($6.70) — and then they’re selling short another contract against it — the $550 puts ($5.40).
The difference in price between the $550 puts that one is long and the $540 puts short is the spread. In this case $6.70 – $5.40 =$1.30
I’d highly suggest you perfect you knowledge and understanding of call/put options, under their risks and then further do some reading on spread before trading on them.
We have an introduction to options here:
https://sam-weiss.com/investing-basics/options/
Start there. Then I’d probably look for a good broker and discuss the matter with a financial advisor at said broker.
There’s enormous amounts of risk in calls/puts/spreads and on top of that, even getting it right, if the allocation is wrong, you end up losing.
two people can put on the exact same trades. 100% identical trades in nearly every way. Same entry prices and exit prices across the board. One person can be up 190% and the other person down 99%. Because it all comes down to allocations. How much capital is allocated to each position and why.
It’s not a simple matter of just putting on a trade. There’s a lot of complexity to it.
For example, we’ve been putting on a general short trade since late July. We’ve been on the wrong side of that trade. But our portfolios have seen very little negative impact because in total at the current moment, we’ve invested 9% in the spread. 3 different positions at 3% portfolio allocations each.
Arryn hasn’t even felt the impact as the portfolio is trading exactly where it was back in July at $240k (up 140% in 13-months).
If someone jumped in with 50%,they’d be totally wrecked. Allocations make all the difference. Anyway, there will always be huge opportunities in the market. I’d gain a clear understanding of things before dabbling and speak with a financial advisor.
(copied from yesterday’s post)
@Sam, what’s your current train of thought regarding the NVDA puts? As I understand it, you expected a small bounce from last oversold conditions on Wednesday/around Fed and another leg lower on which you planned to roll the puts forward, but the bounce yesterday went way past that.
Do you still plan to roll them forward if NVDA gets oversold again in the next few days? What’s your estimate, percentage-wise, of the next oversold conditions leading to a bounce vs. getting ignored and leading into the correction (if that’s possible to answer now)?
So what we were debating ahead of the fed is whether to close them out because Nvidia was oversold. Then we would use the bounce as an opportunity to roll. If that situation arises again, we may transition.
The risk in doing so is that when the correction finally arrives, it’s not going to bounce when it reaches it oversold. Kinda of like we saw back in February. The market will just go straight down for at least the first 1/2 to 2/3rds of the sell-off. So that’s the concern trading out.
the sales period could extend to more than 25 days as in 2022 for a correction greater than 14%?
Oklo, Nuscale and quantum are getting carried away… It reminds me of February 2025 ????
interesting that NVDA is not really following QQQ at the moment.. no more ATH for NVDA?
Hi Sam,
We’re allocating 55% towards the QQQ leaps and maximum of 12.5% towards the QQQ hedges. Does that mean we only have 32.5% left to allocate to the rest of our long positions (e.g. NVDA)? I remember you mentioning allocating 25% towards NVDA and 20% towards another stock as well. Is there something I’m missing or interpreting the %s wrong?
Thanks!
So it’s tricky right. Normally, when we go long, we go 55% QQQ, 20% apple and 25% Nvidia. If we had 100k that’s how we’d allocate it.
Then as the market rallies, we’d reduce down our positions and buy hedges that amount to roughly 10% of the portfolio’s value. We often sell covered calls and slightly reduce to buy the hedges.
Buying the hedge ahead of time will end up impacting the allocations. So here’s how to think about it.
If the QQQ has a standard correction of 8% or something like that. Then we’re unlikely to close out our hedges. We’ll go long with cash on the sidelines and allocate that capital according to our allocation plan.
If the QQQ ends up reaching deeply oversold territory or sustains a larger correction, then we’ll probably close outage hedges and use the hedge profit as the offset (hedge) to the new long position.
We may even keep cash on the sidelines for that exact reason. here’s an example of how this might play out.
Suppose the QQQ sustains a 14% correction and drops to $516 a share from $600. We closeout the September puts at $34 a contact having made $18.00 in the process. In Arryn, if we bought 20 contracts that would give us $68,000 with roughly $38k of that being profit.
What we might do in that case is going long the full portfolio minus the $38k. That $38k is off-set against further downside.
For example, if the QQQ were to continue dropping to $490, that $38k would off-set any losses sustained on our long position which might be a $137500 position.
It adds a buffer of sorts.
If the QQQ rebounds, well then great. We’d use the $38k to buy back a new hedge down the line.
^This is how it might work in theory. But we have to get down there first to see what the situation calls for.
on APril 7, we went 100% long and felt that was the exact right move to do. We went 120% long leveraged in the common stock portfolios because we felt a major rebounds was highly certainly.
If we get in that situation again, we’d probably flip and go full long with the intention of reduce that down once a certain rebound target was met — maybe 10-12% bounce — we close out part of the portfolio and use it to hedge.
Just like we did with teh March 2026 $400 puts on the bounce from $400 to $465-$470.
It’s all very situational dependent and we don’t know what the situation is right now.
—-
Here’s what the September puts allows us to do very specifically. Without them, we can’t confidently go long an 8% drop without worrying about the market rolling over on us. With the hedge, we can do so now.
That’s what it does. It gives us the protection to buy at -8%, -10% and -12-14%. We want it to drop to -14% so that we can then sell our puts and dollar cost average.
If doesn’t fall beyond 8-10%, well then the hedge did exactly what it was meant to do. It allowed us to buy well insulated against further downside.
Hi Sam,
You’ve mentioned these September 2026 $600 puts a couple of times in this briefing. Can I safely assume you mean the $500s? ????
Thanks!
Yeah. My mind is probably thinking buy $500’s at $600 a share. And that’s what’s happening. Sep $500’s at $15-$16 is what we’re buying.
Damm missed $600 by 75 cents. Should have done that today to speed up the correction and then we can long again.
Sam, What is the anticipated correction you mentioned 8-10% in earlier briefing.
So 1/10 of all corrections stop at 8%. That’ the minimum size for a correction. 7-8% really. It’s in that 7-8% zone.
The standard average correction goes for 10-11.5%. Larger corrections are 12-14%>.
I expect 12-14% but we’re going to position and make moves anticipating that it’ll be small than that.
Because the odds point at 8-10% being most likely based on historical precedent, we will trade as if it’s only going to be 8-10%.
If it gets down to 14%, then we have other moves to make which includes closing out our hedge and using the capital to leverage long.
Hello Sam
Does recent information provide more information about the duration of this correction?
Despite your comparisons with previous 40% corrections, are you still looking at -12% to -14% in the very short term and potentially more in the medium term?
Are we still looking at 15- to 25-day averages for -12% to -14%?
The -40% corrections of previous corrections had extended over many more days.
Sam, thank you for the insight on Wednesday night. My QQQ 595 calls printed
QQQ $600.05
This rally almost feels like a hybrid between a melt up and high-vol rally. It’s high% gains but without much volatility in the way of pullbacks.
It just beat the COVID recovery rally for duration but had none of the big pullbacks, it’s kinda crazy how the market just kept going up these last months…
just ride the bubble lol
QQQ $600
QQQ 600 ????
????
Sam, if i understand :
1. Similarities between $400, $500, and $600
Fed event: still close to the breakout point → delayed effect of 1 to 3 days.
Failure to establish above the threshold: $408, $503, and likely $600–603.
Rapid corrections in the following 2 weeks (7–15%), then worsening (up to -25/-40%) if technical breakout confirmed.
Psychological pattern: euphoria → final extension → inability to break through sustainably → abrupt reversal.
2. Probable technical targets post-$600
Short-term pullback: -$8/-9 ($593) then -3/-4% ($575–580).
Intermediate correction: MA200 at ~$525 (≈-12%).
Deep correction: gap filling at ~$495 (≈-18%).
Bear case: return to $450 (≈-25%).
3. NVDA and BTC in this cycle
NVDA:
2021 (QQQ -31%) → NVDA -57%.
2023 (QQQ -30%) → NVDA -26% (IA mania has subsided).
2025 (QQQ -26% Feb–Apr) → NVDA -38%.
Current: If QQQ -15%, NVDA ~-30% ($120–125). If QQQ -25%, NVDA -40/-45% ($95–105).
BTC:
2021: Strong correlation (QQQ -31%, BTC -75%).
2023: Decorrelation (QQQ -30%, BTC -20% only).
2025 Feb–Apr: QQQ -26%, BTC -25% (correlation ≈ 1:1).
Current: Expected ≈ QQQ, with risk of amplification if there is a macro shock → BTC targets 40–45k in the base case, 28–33k in the bear case.
4. Final Summary
The market top is most likely forming around $600–603.
The probabilities of a typical $400 (2021) or $500 (2023) scenario are very high:
an immediate decline of -3/-4% within the week,
then a correction of -12 to -18% ($525–495),
with a tail risk of -25% ($450).
NVDA is amplifying (ratio ~1.5–2x).
BTC follows the Nasdaq, but the amplitude depends on its own flows (ETF/halving).
Sam, You’ve repeatedly mentioned NVIDIA’s low upside going forward.
Does this mean the stock won’t exceed $180-$200 after the correction and do what PayPal does, for example?aà
No, he’s referring to this rally and in the context of buying NVDA at these prices.
The risk reward isn’t there. There’s low upside in general because you’re buying after such a run. It’s not really about whether NVDA can get to $200 or not. It can, and it will. It’s more about the lack of opportunity, taking on all that risk after a 100% run to gain another 10%. Makes zero sense. There is nothing worth buying long right now, there’s outsized risk vs reward.
So it’s not “low” in a general relative sense. It’s low for what people have to come to expect.
Suppose Nvidia falls to $140 in the next correction. The upside is likely capped to $200 on teh next big rally up. That’s $60 over $140 = 42% returns. Now compare that to the 117.6% returns Nvidia just experienced.
So it’s more about the upside after correction is lower. It’s still worth investing in and we’ll buy it on the correction.
Wow no gap up, small gap down actually.
Yeah that happens sometimes. Atypical. But as you can see, we’re north of $600. Short of really bad news, it was inevitable today.
I highly doubt the QQQ will be able to maintain it though. Chances are within the next day or so, we’ll fall back under $600. And even if it surges, it’s going to reverse course in a short-term segmented rally pull-back regardless and then that could turn right into correction.
$600 and not overbought hourly yet. $601 or $602 peak before pullback?
Nvidia news about to push us to $602 and overbought. Nvidia ATH incoming as well?
how well positioned is our October 17 QQQ put spread? should we sell them and relocate to a later date?
We’ll look to sell them probably during the next segmented rally pull-back of 3-4%. So down near $575-$585 a share on the QQQ is where we’ll probably sell them unless the selling is clearly correction worthy.
So we should see a very sharp near-term sell-off soon off of overbought conditions and general profit taking for the 8% move up the QQQ experienced near-term. We’ll use that pull-back as an opportunity to trade out of the Oct 17 spread.
hi Sam, thanks for the response.
Not sure we’ll get a retest. The plan is to buy Nov 21 put-spreads and rise those out. Then use the sell-off as an opportunity to trade out of sep and Oct 17 spreads. That’s the current strategy.
We’ll probably close everything but the November 21 spread. Then if there is a bounce, we’ll add to the November spread.