The last public event I attended before the pandemic hit was a dinner with David Pogue, the Science and Technology writer for the New York Times. It was a night well spent.
David believes that climate change is no longer an “if”, or a “maybe” but a certainty. The sooner we start adapting our lives to it, the better.
The bottom line is that a big piece of the world is about to become unhabitable by humans, possibly as much as the 20% around the equator. The loss of life could be huge.
Raise sea levels by 20 feet and you lose all the coastal cities of China, a large part of the US East Coast, and most of Florida. The US government will have to end flood insurance or go bankrupt. It is already tearing down oceanfront homes that have filed two or three federal claims. Private insurers have already gone this route.
Many species of fish, animals, and birds have been migrating north and south for decades. Indeed, tropical game fish, like mahi mahi, have been showing up along the California coast in recent years, to the delight of local fishermen.
There has been a massive migration of hummingbirds north to Oregon. Global warming could be halted in decades. But to return to pre-1970 levels would be a century-long project. Ironically, the Coronavirus started on that work right after we met, bringing the global economy to a grinding halt and dramatically shrinking the population. US lifespans shrank in 2020 for the first time in 100 years, by one full year.
We spent a lot of time at Mad Hedge Fund Trader talking about future technologies. It will be a huge net job creator over time, but the disruptions to existing industries will be enormous. Steel workers don’t morph into computer programmers easily, although I’ve seen some of the younger ones do it with enthusiasm.
When I told him I was one of the first Tesla (TSLA) buyers 13 years ago and my name still stood on the factory wall, he reached out to shake my hand and say “Thank you.” He was shocked when I told him most commercial pilots can’t safely fly a plane without a functioning autopilot.
I met David on what was certainly the worst-timed book tour in the history of the soon-to-be published How to Pre- pare for Climate Change. There heoffers highly practical advice on preparing for an era of extreme weather events, possible famines and floods, and other climate-caused chaos. Click here for the Amazon link.
The 60-year-old Ohio native has an unusual eclectic background not unlike my own. He graduated from Yale with a degree in music, summa cum laude. He went on to become an itinerant Broadway producer. It was probably his desire for a steady paycheck that drove him into writing, taking a 12-year job at Macworld magazine, of which I was a steady reader.
David published the first Mac for Dummies book in 1988. He went on to write six more of the original “Dummies” books, including those for iBooks, Opera,Classical Music, and Magic. He became the personal technology correspondent for the New York Times in 2000.
David has hosted the Nova TV series for PBS and programs for the Science and Discovery channels. A five-time Emmy winner for his stories on CBS Sunday Morning, Pogue has been at the forefront of new and emerging tech trends for decades. There you can hugely benefit from his annual Christmas technology gift tips.
https://www.madhedgefundtrader.com/wp-content/uploads/2020/04/pogue.png279497Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2024-07-10 09:02:182024-07-10 13:27:05Dinner with David Pogue
Fisker (FSRNQ) is bankrupt and I can tell you that I am not surprised.
The sushi has hit the fan.
The non-Nvidia (NVDA) tech firms minus big tech are really having a tough time staying liquid and dare I might say profitable.
Many already knew Fisker was in trouble.
They also have a terrible car which doesn’t help its case.
If Tesla (TSLA) is having a hard time selling EVs then imagine what it is like for Fisker to sell an utter clunker.
FSRNQ’s car has been coined as the worst EV on the market by many prominent bloggers.
Fisker management told us they might run out of cash before 2024 is over.
Definitely not shareholders like to hear in an industry that is looking more like a race to zero than an industry able to price itself at a premium.
I believe many car executives are ruing the fact of the multi-decade knowledge transfer to the Chinese about building quality cars.
How do we take tabs of the situation at Fisker?
It only sells one car called the Fisker Ocean electric SUV. Last year, around 10,000 of the SUVs were made but only about half had been delivered to customers.
In a recent interview with Automotive News, the company’s founder and CEO Henrik Fisker admitted that the Ocean had quality problems. He blamed the issues on software from different suppliers that worked poorly together and said they were being addressed through updates.
Worldwide sales of plug-in vehicles could rise 21% this year, which represents a smaller rise than the 35% increase in 2023.
The company listed between $500 million and $1 billion of assets, and between $100 million and $500 million of liabilities, in its petition filed in Delaware. The filing protects Fisker from creditors while it works out a plan to repay them.
While Fisker Ocean sport utility vehicle production started on schedule in November 2022, the first SUVs lacked basic features including cruise control. The California-based company told customers it would deploy capabilities it had promised them the following year, via over-the-air software updates.
Fisker produced 10,193 Oceans last year but delivered only 4,929 vehicles to customers.
Fisker follows a handful of other EV startups into bankruptcy, including Charge Enterprises, the installer of EV charging stations that filed for Chapter 11 protection in March. Other EV makers that have filed for bankruptcy include Lordstown Motors, Proterra and Electric Last Mile Solutions.
Anecdotally, EVs didn’t calculate properly how difficult it is to convince the 2nd wave of buyers.
For example, everyone in my family that will buy an EV has already bought one.
One Gen Z relative of mine swears he will never buy an EV because it doesn’t amount to more than a “toy car” with a battery that needs to be plugged in. He prefers a Ferrari or a Maserati where he can hear the engine roar. There is a high chance he will never be persuaded to buy an EV or if he does get persuaded, it will take 10-20 years for him to come around.
That is what EV makers face in bringing forward the next buyer.
Therefore, look at the bottom of the barrel EV production, they are all facing Chapter 11 and this is just the beginning.
Fisker’s share price peaked at around $30 per share in 2021 and now shares trade at $.02 per share. I would not buy the stock even at these levels.
Tesla’s halving of its share price also most likely means it is fairly priced for right now as we wait for a catalyst to send us either up or down.
The walls are closing in on the EV industry in the short-term and I advise readers to head to higher ground, let’s say the chip industry for a better crack at tech stocks.
https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png00april@madhedgefundtrader.comhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngapril@madhedgefundtrader.com2024-06-26 14:02:042024-06-26 14:17:17Fisker Blows Up
I know all of this may sound confusing at first. But once you get the hang of it, this is the greatest way to make money since sliced bread.
I still have two positions left in my model trading portfolio that are deep in-the-money, and about to expire in 3 trading days. Those are the
(AMZN) 6/$160-$170 call spread
(SLV) $23-$25 call spread
That opens up a set of risks unique to these positions.
I call it the “Screw up risk.”
As long as the markets maintain current levels, this position will expire at its maximum profit value.
With the June 21 options expirations upon us, there is a heightened probability that your short position in the options may get called away.
Although the return for those calling away your options is very small, this is how to handle these events.
If exercised, brokers are required by law to email you immediately and I know all of this may sound confusing at first. But once you get the hang of it, this is the greatest way to make money since sliced bread.
If it happens, there is only one thing to do: fall down on your knees and thank your lucky stars. You have just made the maximum possible profit for your position instantly.
Most of you have short-option positions, although you may not realize it. For when you buy an in-the-money vertical option spread, it contains two elements: a long option and a short option.
The short options can get “assigned,” or “called away” at any time, as it is owned by a third party, the one you initially sold the put option to when you initiated the position.
You have to be careful here because the inexperienced can blow their newfound windfall if they take the wrong action, so here’s how to handle it correctly.
Let’s say you get an email from your broker telling you that your call options have been assigned away.
I’ll use the example of the Amazon (AMZN) June 2024 $160-$170 in-the-money vertical Bull Call spread since so many of you have these.
For what the broker had done in effect is allow you to get out of your call spread position at the maximum profit point 3 days before the June 21 expiration date.
In other words, what you bought for $9.30 on June 6 is now worth $10.00, giving you a near-instant profit of $840 or 9.68% in 11 trading days.
All have to do is call your broker and instruct them to “exercise your long position in your (AMZN) June 2024 $160 calls to close out your short position in the (AMZN) June 2024 $101 calls.”
You must do this in person. Brokers are not allowed to exercise options automatically, on their own, without your expressed permission.
You also must do this the same day that you receive the exercise notice. This is a perfectly hedged position. The name, the ticker symbol, the number of shares, and the number of contracts are all identical, so you have no exposure at all.
Call options are a right to buy shares at a fixed price before a fixed date, and one option contract is exercisable into 100 shares.
Short positions usually only get called away for dividend-paying stocks or interest-paying ETFs like the (AMZN). There are strategies out there that try to capture dividends the day before they are payable. Exercising an option is one way to do that.
Weird stuff like this happens in the run-up to options expirations like we have coming.
A call owner may need to sell a long (AMZN) position after the close, and exercising his long (AMZN) put is the only way to execute it.
Adequate shares may not be available in the market, or maybe a limit order didn’t get done by the market close.
There are thousands of algorithms out there that may arrive at some twisted logic that the puts need to be exercised.
Many require a rebalancing of hedges at the close every day which can be achieved through option exercises.
And yes, options even get exercised by accident. There are still a few humans left in this market to blow it by writing shoddy algorithms.
And here’s another possible outcome in this process.
Your broker will call you to notify you of an option called away, and then give you the wrong advice on what to do about it.
There is a further annoying complication that leads to a lot of confusion. Lately brokers have resorted to sending you warnings that exercises MIGHT happen to help mitigate their own legal liability.
They do this even when such an exercise has zero probability of happening, such as with a short call option in a LEAPS that has a year or more left until expiration. Just ignore these, or call your broker and ask them to explain.
This generates tons of commissions for the broker but is a terrible thing for the trader to do from a risk point of view, such as generating a loss by the time everything is closed and netted out.
There may not even be an evil motive behind the bad advice. Brokers are not investing a lot in training staff these days. In fact, I think I’m the last one they really did train.
Avarice could have been an explanation here but I think stupidity and poor training and low wages are much more likely.
Brokers have so many ways to steal money legally that they don’t need to resort to the illegal kind.
This exercise process is now fully automated at most brokers but it never hurts to follow up with a phone call if you get an exercise notice. Mistakes do happen.
Some may also send you a link to a video of what to do about all this.
If any of you are the slightest bit worried or confused by all of this, come out of your position RIGHT NOW at a small profit! You should never be worried or confused about any position tying up YOUR money.
Professionals do these things all day long and exercises become second nature, just another cost of doing business.
If you do this long enough, eventually you get hit. I bet you don’t.
Calling All Options!
https://www.madhedgefundtrader.com/wp-content/uploads/2018/11/Call-Options.png345522april@madhedgefundtrader.comhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngapril@madhedgefundtrader.com2024-06-18 09:02:492024-06-18 11:18:18A Note on Assigned Options, or Options Called Away
Below please find subscribers’ Q&A for the June 12 Mad Hedge Fund Trader Global Strategy Webinar, broadcast from Incline Village, NV.
Q: How will Nvidia (NVDA) trade post-split?
A: Well, it’ll probably keep going up, because I think the year-end target—the old $1400, which is now $140—is still good. And I have a whole bunch of LEAPS, which are post-split $40, $50, $60 in-the-money, and I’m just keeping those. It’s a good cash management tool to have. So, even $500 points in the money, you’re still looking at about 20% returns by the end of the year on a January LEAPS. If you can buy the January 2025 $70-$71 LEAPS for 83 cents that’s a 20.48% profit at expiration in six months. So if you want a safe, very high return, that is the best way to do it in the financial markets, is to go way in the money. LEAPS will still pay you a lot of money amazingly. This trade will disappear someday but it’s there now and I’m taking it. Screw 90-day T-bills—I’m going into $500 in-the-money LEAPs on Nvidia, which pays four times as much.
Q: Is Broadcom Inc (AVGO) the next Nvidia?
A: There is no next Nvidia—the next Nvidia is Nvidia. Buy Nvidia on a 20% decline, which I think we may get sometime this summer. That’s a dip you want to buy for a year-end run to $140. Also, Broadcom isn’t exactly undiscovered at this point. It has doubled since October, while Nvidia is up 4 times. So if the bargain in the market for you is double in six months, I’m not sure you should be in the market. That said, I put out a report on split candidates last week and (AVGO) is very high on the list.
Q: What’s the best way to trade split candidates?
A: I actually just wrote a newsletter about this last week. There are in fact 36 high-priced, good money-earning split candidates, and I listed them all. You can buy really any of those if you’re looking for a high-priced stock that is growing. And management has a huge incentive to do splits because it makes the stock go up faster, and they’re all paid in stock options. So that is another reason you go into these. The best way to trade splits is buying the candidates because the biggest move is on the announcement of the split—you usually get 10%, 15%, or even 20% returns on the announcement.
Q: How do you envision AI in 10 years?
A: Well, it’s unimaginable. I can tell you from experiencing a lot of these big technology changes—it’s always tremendously underestimated by the markets, and you can safely bet on that. It’ll go up a lot more than you realize. That’s what happened when we jumped from six track tapes to cassettes, Betamax to VHS, teletypes to faxes, and faxes to emails. I thought Steve Jobs was crazy when he introduced the iPhone. Nobody makes money in handsets. But he proved me wrong.That makes my $240,000 DOW by 2030 projection completely reasonable.
Q: What will inflation do for the rest of the year, and how will it affect stocks?
A: Inflation will go flat to down for the rest of the year. And that is being driven by artificial intelligence—the greatest deflationary product ever created in the history of the economy. It’s unbelievable the rate at which AI is replacing real people in jobs. If you want a good example of that, I had to call Verizon yesterday to buy an international plan, and I never even talked to a human. They listed out three international plans in a calm, even male voice, and I picked one. Or go to McDonald's where $500 machines are replacing $40,000 a year workers. This is going on everywhere at the same time at the fastest speed I have ever seen any new technology adopted. So buy stocks, that’s all I can say.
Q: What’s your opinion on Arm Holdings (ARM)?
A: I love it. There are very few serious companies in the chip area, and this is one of them.
Q: Do you expect gold mining stocks to continue upward?
A: Yes, but the better play here is the metal. Gold and silver aren't being held back by inflation while the miners are. Plus, the main buyers in the market now are the Chinese, and they don’t buy gold miners—they buy gold, silver, copper, platinum, and uranium outright.
Q: What about Tesla (TSLA) long-term? Kathy Woods's target is $2000 long-term.
A: I think Kathy Woods is right. But we have to get through the nuclear winter in the EV space first, where suddenly the market got saturated. I think Tesla is the only one who could come out of this alive by cutting costs and advancing technology, as they have always done. When I bought my first Tesla Model S1 in 2010, the battery cost $32,000. Now it’s $6,000, and you get a lot more range. Did (GM) offer an equivalent cost improvement with internal combustion engines? So, yes, never bet against Elon Musk—that’s a good 25-year lesson on my part, and should be for you too.
Q: Can you elaborate on the lithium trades?
A: I listed three names in my letter last week, (SQM), (FMC), (ALB),and the only thing you know for sure is that they’re cheap now. They could stay cheap for another six or 12 months. But when you get a turnaround in the global EV market and the manufacturers start screaming for more lithium, and all of the lithium stocks will double, or triple and they’ll do it fairly quickly. You can’t beat a market bottom for getting involved. Just look at my above (NVDA) trade. Not only would they be good stocks buy, but it would be a good LEAPS buy down here because then you could get 4 or 5 times your money on a small move.
Q: Can you suggest Amazon (AMZN) LEAPS?
A: January 2025 $195-200 just out of the money, should give you a return of about 120% over the next 6 months. That gets you the annual yearend run-up. And that’s my conservative position. My aggressive ones are all in Nvidia.
Q: Do you think zero-day options have permanently forced the Volatility Index ($VIX) to the $12 handle?
A: Yes, I do; it’s killed that market. Something like 40% of all the optiontraders on the CBOE were trading the ($VIX) from the short side. Shorting the ($VIX) now would be madness. That has to bring tough times for that whole industry. Trading call spreads at a $12 volatility, you’re better off buying the LEAPS because the LEAPS give you much bigger returns with much less risk. And a $12 ($VIX) means you’re getting your LEAPS at half the historic price. I’m just waiting for a new market low to start pumping out the LEAPS recommendations. All the more reason to sign up for the Mad Hedge Concierge Service to get an early read into the LEAPS recommendations. For more information on that, contact support at support@madhedgefundtrader.com
Q: What will happen to Apple (AAPL) after the 11% surge?
A: It goes to $250 by the end of the year. Now that it has the kiss of AI on it, people will pour into it.
Q: Why is value lagging?
A: Because AI is entirely a growth story, and you look at all the domestic value stocks, they’re going absolutely nowhere. Value has been in the dog house for years and I’m in no hurry to get in there.
Q: What is the best dividend stock I can invest in right now?
A: That’s an easy one.Altria (MO) has a 9% dividend—you can’t beat that. But you have to hold your nose when you buy this stock because they are in the cigarette business. However, their big growth now is in Asia ex-Japan where the government has a monopoly on tobacco, particularly China. Note that this is not an undiscovered idea; lots of people like a 9% dividend stock and (MO) has already gone up 20% this year, but I think there is still some money to be made here.
Q: How can we subscribe to get early LEAPS recommendations?
A: That would be the Concierge Service. Contact Filomena at customer support, and they will get you taken care of right away.
Q: What about the small nuclear plays?
A: I actually happen to know quite a lot about nuclear plant design, having worked for the Atomic Energy Commission in my youth, and the new designs address every major issue that held back nuclear power with the old 1950s designs. For example, building them underground and eliminated the need for these giant billion-dollar four-foot-thick reinforced concrete containment structures that dot the horizon. Not using pure Uranium alloys that can’t go supercritical is another great idea. So I like them. Are they good stock plays? Not right now. It takes a long time to introduce a new energy technology. Bill Gates is financing a new plant built by Terrapower in Wyoming, and it looks like a fantastic plant, but only Bill Gates could invest at this stage and expect to make money on it. He has very long-term money and you don’t. I would wait until you get a working model plant in the United States before going into these things, but potentially you’re looking at a 10 to 100 times return on your money if it works.
Q: Should I invest in Airbnb (ABNB) because of increased international travel?
A: Yes, we like Airbnb. Especially since they will get a push with the Paris Olympics next month. Not only does that get people to Paris, but it gets people to all of Europe because they usually add on additional trips to a visit to the Olympics.
Q: What would you do in Netflix (NFLX), and what strikes would you use?
A: I would do a LEAPS. Wait for a correction, at least 10%, preferably 20%, and then I would go at the money one year out and that would get you about 100% return. So, that’s the way to do that. This is not LEAPS territory right here —all-time highs are not LEAPS territory. You want to put on LEAPS when everyone else is throwing up on their shoes; the last time they did that was October 26.
To watch a replay of this webinar with all the charts, bells, whistles, and classic rock music, just log in to www.madhedgefundtrader.com, go to MY ACCOUNT, select your subscription (GLOBAL TRADING DISPATCH, TECHNOLOGY LETTER, or Jacquie's Post), then click on WEBINARS, and all the webinars from the last 12 years are there in all their glory
Good Luck and Stay Healthy,
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
(The Mad June traders & Investors Summit is ON!)
(MARKET OUTLOOK FOR THE WEEK AHEAD, or WELCOME TO THE MALLARD MARKET and ME AND 23 AND ME),
(AAPL), (GOOGL), (AMZN), (TSLA), (MSFT), (META), (AVGO), (LRCX), (SMCI), (NVR), (BKNG), (LLY), (NFLX), (VIX), (COPX), (T), (NVDA), (LEN), (KBH)
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