Samwise Quick Reference Handbook
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Sam, losing confidence? All along you’ve said things rejecting the notion of “what if it’s different this time” now your post suggests you may be second guessing?
I am big believer in how it’s usually not different and operating under that premise is very costly.
Just gauging your temperature here because I’m surprised to see you entertaining that idea.
Nvidia keeps on going up! It looks like nothing can stop it’s momentum now.
Only ~9% upside left for NVDA to hit $200. Chances that it gets there before the correction hits?
I’m sure Sam will respond, but I’m curious how you get to this assumption, as I didn’t get this impression and the post before the 80 day update ended with “We have a rally that is responding in proportion to the size of the sell-off, following all of the general rules and doing nothing unique or out of the ordinary.”
CG is right. The point of the post is to walk you through the risks and end with a point that shows whole uniqueness is a risk to a major sell-off like Covid, this really is more like 2018 with virtually no unique features. We have higher returns. But that’s to be expected given the really size.
we’ll see at day 100 🙂 !
NVDA is pushing to 180$, insane ! Thanks for the update as always , Sam
That’s one spicy drop on the SPY and the QQQ
That is an absolutely relentless beat! What an insane market!
Hi Sam, if this MSFT and META momentum translates to a spike tomorrow at open, does this potentially push QQQ into deeply overbought as you discussed hadn’t happened earlier this week? If so, does that give us more clarity around an intermediate top? I guess another way to put it is whether deep oversold late in a rally is a sign of a potential top (in which case maybe this spike means less because we know it’s fuelled by earnings, less by overall market conditions), or if it’s a potential trigger of an intermediate top (i.e. doesn’t matter how we got to deep oversold, whether market conditions or earnings, it’s something that can set things in motion)? Does it make the put spreads more attractive given that we’re at 80 days and getting at potentially even more of a discount? Thanks as always!
Wow! Nvidia at $185. What a huge mistake selling NVDL probably the biggest mistake I made in the market ever. Terrible, terrible call!! Dosen’t look like the market is slowing down anytime soon. So much for that correction in late July
Holding onto NVDL would’ve been the less rational choice, as were trying to use historical data analysis to go for the most probable outcome (i.e. narrowing down the start of the next market correction as best as possible instead of endlessly riding the FOMO train / being too greedy). According to Sam’s analysis it’s highly likely that there will be plenty opportunity to buy back into NVDA/NVDL at a much lower price.
Although I do wonder if NVDA might ride the momentum a bit further and push to $200 before the correction unfolds. Would love to hear Sam’s thoughts on this. We’re just 15 points away from the next huge psychological ceiling. Could the potential magnetic effect to $200 derail our short trades if we put them out too early (tomorrow) and all at once?
Does NVDA getting dangerously close to $200 call for a more careful approach (e.g. allocating the remaining short trades in steps) as a final push to $200 might even pull the entire QQQ too far up?
$20 or so in missed value per share is the biggest mistake you’ve ever made in the market? Good on you. Sure, you’re allowed to be frustrated, but this is all easy to say in hindsight when the market is at an all-time high of FOMO and euphoria. I’m teaching myself to like all of the euphoria/fomo/doom&gloom posts, because it means that the tides are about to turn. Have we already forgotten what it was like a few months ago? Everyone is so convinced…until it changes.
So we haven’t sold NVDL at all. We’ve sold calls against our NVDL long position. But we haven’t sold NVDL at all.
There’s a huge difference between selling NVDA and NVDL and selling covered calls against our positions that expires in September.
A huge difference between those two things. Also, if every time there’s a rally you try to capture literally every point in that rally then you’ll never hedge and you’ll always ride the stock all the way down.
The key is to sell covered calls during froth, which is what we’ve done.
The effective end result is I can almost guarantee you that we will lose zero points on NVDA or NVDL.
Those will be two end result outcomes by January with a near certainty
We will either collect on our covered calls that we sold, or we will get called away and buy back our positions at substantially lower prices than where we closed out our position.
We’re sitting in the month of July, not in September mind you. Again, we are still long our Nvidia. We are still long our NVDL. We’ve sold covered calls against our position.
And we’ve made it clear that that’s the right way to do things. Closing out of positions outright is not a smart move.
So I could just say that from the perspective of what we are doing here in our portfolios, we feel perfectly confident that the end result will all work out in our favor.
That once the correction happens, we will either close out our covered calls at a profit or we will get called away and buy back our Nvidia/NVDL at a substantially lower price than where we closed out at.
Oh yeah that’s right. NVDL positions we needed to trim because they were becoming too dominate in the portfolio and due to the permanent loss of value sustained to NVDL in corrections. Nvidia long position in our common stock portfolios and our core options positions we still maintain.
Tarly, Tyrell, Frey all hold Nvidia. Arryn holds leaps and Lannister both (NVDL & Leaps) because with Lannister our NVDL is a smaller position.
@Sam, are you planning to put out all remaining short trades tomorrow in one go? Or allocate in steps over the course of the next few trading days?
Also, what’s the benefit of dollar cost averaging down the NVDA $150 puts, if we could just go for a more realistic strike like $160-170 (same expiration)? Why the huge difference in strike prices in the Sep ($150) vs Oct ($175) puts?
No we wouldn’t ever do that into a breakout. So sometimes you get what we’re seeing right now which was overhype premarket that fizzles during market hours. But in most other cases — the most common thing to happen — is when we get a breakout, there’s follow through. So you wait for the follow through and for things to stall out first.
Otherwise, if you short into a gap-up, you’re often going to get steamrolled. So right now we’re just waiting.
What we want to see is a stall out. Sideways action like we saw last week. Once we get to that point, we’ll look to add.
Today’s market is exactly what I meant from Sam’s post of Rally day 76. Now everyone is looking at Nvidia $200.. lol I am really excited to see how the market is going to unfold at rally day 100 or 130+ if we ever do get an outlier.
With the obvious caveat that anything overnight can change by open, does the recent surge in both QQQ and NVDA due to MSFT/META’s earnings increase the odds that the rally lasts the full 100 days? Or is the market still likely to roll over at any moment (maybe even partially due to this surge pushing the market in more overbought territory)?
There’s also NVDA earnings on Aug 27th which might encourage the market to hold off on any real sell-off until then. Or is this a more or less irrelevant factor in deciding when the correction might happen (even though NVDA is one of the major driving factors of this whole rally)?
This happened several times before. The timing of NVDA reporting is somewhat unfortunate.
When the market falls, so is NVDA, reporting or not.
So we’re not doing anything today. It’s too early. It would be different if the QQQ were up a dollar or something like that. But there’s momentum here.
The key is to wait or optimal circumstances. The trades don’t have to be made at all. We can simply wait for a correction and take our cash and deploy. But we don’t want to short into a surge.
So we’ll wait. Maybe we get closer to day 90. We need a stall or a major reversal first.
Can you elaborate on how the kind stall or reversal that you are looking for this trade to be put on?
QQQ already reversed down to +1 point, if that’s the reversal we were waiting for.
Today is a good reversal, but it’s still 11:40 AM. We have nearly 4 hours. And even if we get a reversal today, it’s not significant on its own.
Unless the QQQ were to close it like 563 it’s not significant
A major reversal would be significant. But down one or two points on the day while a strong piece of evidence that were topping isn’t by itself enough
It would be bad for sure if the QQQ closed down two points today. Especially after all of the optimism premarket.