Samwise Quick Reference Handbook
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Are you considering buying calls?
If the QQQ reaches a 20 RSI we might take a shot. Not up here at a 30 RSI not even close.
We need the QQQ to get down to a 20 RSI on the hourly and that might get us to both cut half of our September puts and then we might take a near-term long position that we would hold for a few days
Because realistically, even in a correction, we generally get a big rebound
What we saw in February is the exception it’s not the rule.
And there’s a way to fight through that exception actually.
Like if we get long at a 20 RSI and we get the exception, there’s a strategy to side step the damage for sure.
I will outline the whole thing
But there’s certainly a way to play the bounce and we’re gonna want to do so.
But we need the RSI to get down to 20 first and realistically for it to happen at a critical line of support. we need those two things going on. So for example, if it reached a 20 RSI at 610 — the gap fill line.
Getting a 20 RSI at significant support will likely lead to at least a 10 point bounce. That is a tradeable bounce.
It would call for closing half of the September’s and going long maybe something like the September 700’s.
Even making just two points of profit on the 700’s and saving two points on the 500s would make a big difference.
Because we’re talking about four points of difference total. it would completely change the whole entire picture
And in fact, if we’re able to accomplish this trade, it would allow us to take on a much larger September trade because we already have such a reduced basis
So here’s what that might look like
We might close out half at a 20 RSI thereby holding a 20 contract put pos. We might then buy a 20 contract call position in the 700 calls. If the QQQ then rebounds as expected, we would close the 20 contract long call position and then we might buy a 30-contract put position when we buy back the September 500’s.
Because we saved four points it’s the same as if we had bought those extra 10 contracts up near 637 638 to share
It has the same exact impact
So this is something we might do we will discuss it more.
Sorry if some of this is jumbled, I’m using Siri to respond
and this time we close the spreads early it’s going to ignore oversold and roll right over into full blown correction
Which would still be a great outcome with the Sept ’26 $500 puts and ability to go long again
that’s always a possibility, right.
But right now we’re not thinking about it from the perspective of trying to produce a return on the Novembers, we are more thinking about it in terms of how do we reduce the level at which the Septembers need to perform in order for us to offset the whole trade. That’s the goal right now.
Also, as I’ve pointed out since the strike is too far away at this point, it’s no longer viable as a trade because the QQQ would need to fall by more than 10%.
Thus our goal here is to maximize the exit price by leveraging sentiment, volatility, and oversold conditions.
There’s a fundamental difference between being within the strike zone with weeks left and being outside of the strike zone within a few weeks left.
QQQ can drop 8 to 10% in just a matter of a few days. But that doesn’t really get us close to the level the QQQ needs to be at for our trade to work. Like even if the QQQ started to correct right here it wouldn’t reach our strike zone by the time we reach expiration because we’re too far from that point.
Or put another way, even assuming a full standard correction on a 2 to 3 week timeline. The November spreads aren’t in the money on a standard correction.
What’s more the spread is giving us back $.31 which is about a third of the cost we put in and it’s a one percent return of capital. Meaning the whole trade will have been closer to 9 to 10% after backing out proceeds.
That is easily recoverable in half of the September puts we own.
20 contracts at $14.65 need to reach about $27-30 to produce us a near full offset. I will need to look at the math, but it’s very close to that.
The other 20 contracts act as a hedge.
As I’ve mentioned before the strategy trades that we put on our based on the portfolios that we manage and that’s all we really have control over here.
The 10% allocation, the September puts, and saving 1% portfolio capital — all of these things enter into the equation.
So I’m not super concerned about the QQQ rolling over and if it does so then it’s just getting closer to our end goal.
If the QQQ rebounds from here, well then we have a little more capital we can allocate to the September puts.
Also, now that the QQQ has shown a segment pull back from 637 we now know where it is we need to buy or add to our position.
——
Finally, I’ll add one more point that each time the QQQ peaks and pulls back like this the odds that the next pullback leads to a full correction skyrocket on each successive attempt.
One of these pullbacks is going to be a crash
The fact that Nvidia has formed a double top at 210 drastically increases the probability that we’re out of top of the market
The big counter arguments to that is first Nvidia hasn’t reported earnings yet and that can turn things around. Instead of a double top, we might be having a double top breakout in play.
Another big counter argument to the market topping right now is the fact that the SPY has not reached the 700 level.
Then again we have seen Century Mark tests at $X90 before. If the market topped right here and went into a correction, there’s no doubt that the SPY reaching 690 a share constitutes a Century test.
Anyway, the point is we may be at the top. We may not be what we do know is that the QQQ has reached overall conditions and we may very well not see $.31 again on the November spread and we wanna preserve as much of that capital as we can. Particularly as we have moved on from the trade.
Our focus is now let’s recover the spread trade using the Septembers and further set up a hedge for when we need to get long.
And notice this can be done every single time the QQQ decides it wants to reach extremes like this.
We can put on the same exact spread rate each time reaches 80 to 100 days as it has. And those cases where the QQQ decides to continue higher for longer, we will have a strategy to recoup that small cost.
When the QQQ follows the trend as it usually does in 90% of the cases, we capitalize on the spread trade.
It’s really that simple we’re capitalizing on the totality of the cycle instead of on one individual instance of the trade.
Part of doing this requires us to exit the way we’re doing right now.
Another thing we will need to do is trade out of half of our September puts when the QQQ reaches a 20 RSI.
Right when he gets down to 20, we have to trade around those as a way to continuously reduce our basis if the QQQ decides it wants to keep climbing
We will be able to constantly move our basis, lower and lower until the correction actually strikes.
didn’t even read it, but, wrong
we committed to the trade. that was the precedent set by the prior trades it behoove me you’re willing to tap out when odds are highest good outcome.
where is Smiley?
chances were higher back then in the 600 zone
breaking out above 620 lower the chances of the trade being in the money notably
“allocation” who?
Sam, please don’t hide from the fact you’ve stressed allocation over and over and over again as the basis for riding out trades. I’m not even going to say “bad” trades, just trades in general.
Suddenly, at the end of the road you decide to capture whatever value you see left. Odds are higher now than ever of a correction at any moment as you’ve stressed over and over and over again. Every new rally day, the correction probability increases, yet you decide to exit the last remaining trade for 31 cents.
Makes no sense. You committed to the trade on the basis of allocation and repeatedly said that small sum weren’t worth acting on, yet when correction risk is at peak levels you decide to exit. Not adding up.
Can you please address the question: if your trades are so good, don’t you stand to benefit more from acting, than selling the idea? Please. share your motivation for collecting subscription payments rather than personally acting and profiting on the ideas?
Hi Sam,
Are we worried at all about the $500 strike on the hedges in the case of a standard 10% correction from $637 to $570? I know we’ve mentioned wanting to transition to $550s before. I wanted to understand if you’re worried at all about the $500 strike price, what situations would cause the $500s to be ineffective, and what future situations prompted you to consider transitioning to the $550s.
Thanks!
Hey Sam, thoughts on Google and its recent positive price action, especially in this modern AI landscape? Still sticking with the big guns (NVDA and QQQ) for the most part?
You can see the sentiment shifting on a dime. Headlines are no longer pointing to nebulous catalysts that a social media post can “fix” for this decline (trade war with China reignited), they’re starting to call it for what it is. Maybe it’s a case or broken clock right twice a day with these headlines piggybacking off comments from CEOs though.
We’ve been here before during this rally,m where we think this is it, but I’ll be truly impressed if this is shrugged off in a meaningful way (i.e. not just an oversold bounce).
Sam,
As usual, very impressed with the QQQ historical topping analysis you’ve put together. I’m waiting for the next leg down and your next trades to follow. Thank you for all the hard work you’ve put in. Much appreciated????
Why are the September $500 puts down again?
The reason I asked why the September QQQ are down because Fidelity is showing they were down today and closed at $13.00. Which doesn’t make sense to me. that’s why I asked why they went down
The September 18th QQQ $500 puts are the ones that are listed at $13.00 in my account
Disregard my comments about QQQ 500 puts. They didn’t update I’m my account till now for some reason. They’re $15.26. Thanks
If the market was closed when you checked the value of your trading portfolio, it is possible/likely that the value of your positions was reflecting the highest Bid & lowest Ask prices that were Open at the point-in-time when the market closed. It’s annoying, because sometimes you will see completely illogical values (for example, a deep ITM Put option that is “worth” less than a Put at a lower strike for the same expiration date), but your trading platform is obligated to display those values because they represent the most competitive prices that were on the market at EOD.
Bought more puts at 622$????. Gut is telling me we’ve topped. March 2026 595-600 put spread. So if for some magical reason we don’t have a correction until March I can sell on any 600 retest for no loss, or if we’re currently in a correction I can still make good gains.