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June 15th, 2024 | Issue 238 |
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This week, all eyes were on the latest FOMC decision and inflation data, which provided crucial insights into the current state of the market. Amidst these significant economic updates, earnings season continued to make waves, with Oracle's (ORCL) recent report highlighting the volatility we've seen with Dell (DELL) and NVIDIA (NVDA). Oracle's latest earnings, while slightly below Wall Street forecasts, painted a positive picture of the company's future. The company demonstrated strong growth in its cloud infrastructure deals, pointing to a rising demand for its services, particularly in the field of artificial intelligence (AI). This upbeat sentiment rippled through the market, significantly benefiting Nvidia. After Oracle's earnings call underscored a strong demand for Nvidia chips, Nvidia's stock experienced a notable increase, further fueled by a recent stock split. In the backdrop of these earnings reports, there was significant activity in the options market surrounding Oracle. Open interest, a key metric representing the total number of outstanding options contracts that have not been settled, indicated a substantial move was expected. Specifically, there was large open interest at the 140 call strike, along with a noticeable call skew. Typically, this scenario suggests high demand for call options with minimal hedging—signifying strong bullish sentiment. To strategically position myself amidst this anticipated volatility, I employed a call butterfly spread, a sophisticated and cost-effective options strategy. But what exactly is a call butterfly spread? A call butterfly spread is an advanced options trading strategy that involves three key steps: - Buying one call option at a lower strike price – In this case, the 135 strike.
- Selling two call options at a middle strike price – Here, the 140 strike.
- Buying one call option at a higher strike price – The 145 strike in this scenario.
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This strategy creates a spread that allows for participation in the stock's movement at a lower cost, balancing potential risk and reward. The goal is to profit from limited price movement, with the maximum profit achieved if the stock closes at the middle strike price at expiration. With Oracle, this approach proved highly successful. The price movements stayed within our desired range, enabling me to close the trade with triple-digit returns. The precise entry and exit points of the trade were carefully timed to maximize profitability. For a detailed analysis of this trade and other successful strategies, I encourage you to visit our trading performance page. As we continue to navigate the ever-changing market landscape, staying informed and strategically positioned is key to capitalizing on the opportunities that volatility presents. |
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Chief Investment Officer/Founder |
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TRADE IDEA OF THE WEEK: iShares Silver Trust (SLV) |
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With inflation levels stable and corporate earnings consistently surpassing expectations, the environment favors silver, valued both as an inflation hedge and an essential industrial metal. Silver's appeal extends beyond its traditional role as a store of value, increasingly valued for its industrial applications in sectors like green energy and technology, amidst recovering global economies and sustained commodity demand. |
iShares Silver Trust (SLV) tracks the price movements of silver bullion, providing direct exposure to silver prices with expenses deducted from returns. Held in secure vaults, each SLV share represents fractional ownership of physical silver bullion. Silver historically serves as a reliable hedge against inflation, gaining value amid economic uncertainty, and its industrial uses in electronics, solar panels, and medical devices support price stability. Traded on major exchanges, SLV offers liquidity and transparency, appealing to investors seeking precious metal exposure without the logistics of physical ownership. It diversifies portfolios, potentially reducing overall volatility compared to traditional asset classes. |
Advanced Artificial Intelligence models integrated with YellowTunnel's analytics highlight technical and fundamental factors supporting SLV's positive trajectory. Amid fluctuations in treasury yields and equity markets, SLV's liquidity and exposure provide stability and potential for capital appreciation. As economic data and earnings updates unfold, SLV remains a strategic addition to watchlists for investors aiming to capitalize on current market dynamics and enhance portfolio resilience. This week, I'll be adding iShares Silver Trust (SLV) to my portfolio! |
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| Vlad Karpel
YellowTunnel and Tradespoon Founder |
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P.S. Click here for access to the Power Trading Live Strategy Roundtable Recorded every Thursday. |
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DISCLAIMER: Vlad and his team may have a financial interest in the picks as they trade many of the same equities and options they pick. Vlad Karpel and YellowTunnel (Company) is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. All investing strategies are made available to the general public on a regular basis. We do not provide personalized financial advice or investment recommendations. As an investor, you know that any kind of investment opportunity has its risks. There is no such thing as low-risk stocks and we recommend you invest wisely and that only risk capital should be used to trade. Investing in Stocks and Options is highly speculative. No representation is being made that the use of this strategy or any system or trading methodology will generate profits. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed here and on our website. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE SUCCESS: It should not be assumed that the methods, techniques, or indicators developed at YellowTunnel will be profitable or that they will not result in losses. Nor should it be assumed that future picks will be profitable or will equal past performance. All of the content on our website and in our email alerts is for informational purposes only and should not be construed as an offer, or solicitation of an offer, to buy or sell securities. Remember, you should always consult with a licensed securities professional before purchasing or selling securities of companies profiled or discussed on YellowTunnel.com. Performance results that are discussed above are from the Live Trading Room. Multiple YellowTunnel tools were used to achieve these results. Trade % Gain/Loss is calculated by dividing the $ Gain/Loss by the Max Risk, which is the posted Stop Loss for the trade. Yellow Tunnel's performance data represents the average return on all trading recommendations from January 1, 2020, to today. *Win rate percentage reflects the average that Yellow Tunnel's software helped me identify a profitable investment strategy.** Triple-digit returns are not typical and are not intended to reflect the likelihood of similar returns in the future. |
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