Here's a really good example of time decay that happens every day with options. This option expires on Friday Sept 20 and is currently OTM:
The S&P 500 bounced back by 4.0% following a stunning decline of 4.2% last week. The stock market is super volatile.
I have a small position in SPY cash secured puts with a strike price of $545. It's quite ITM so I think I'll let it ride it out until Friday.
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Not much to report. Stocks were mostly flat WoW, except for Bitcoin.
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What a wild ride the past 3 weeks has been. Finally on Friday, Fed Chair Powell confirms that an interest rate cut is coming in September. Question on everyone's mind is now: By how much? Most are expecting 25 bps but there's a growing group of investors who think we need 50 bps, even 75 bps. We'll find out in less than 4 weeks.
]]>I had a covered call position with QQQ opened a few weeks ago with a strike price of $480. For most of the time it was out of the money but last week the stock jumped to the mid $470's so I decided to buy back to close a few days before the expiry date, which is today. I pocketed a couple hundred dollars by closing my position early but gave up some money since the option still had time value.
Strong performance from the Nasdaq helped the stock market recover from its losses. Quick post this week due to vacation!
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Overall portfolio fell 2.5% week-over-week which was a lot less than what I would have expected on Monday.
The Japanese government raised interest rates by 25 bps which shocked the market and sent domestic Japanese shares down 12% and affected U.S. stocks throughout Monday. However, most of the losses were trimmed by the end of the week as investors realized that the U.S. economy remains quite strong still. There was a lot of chatter about an economic collapse on Monday but that fear seems to be overblown.
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Microsoft tumbles following weaker than expected Azure cloud revenue growth [free WSJ article]
Friday's jobs report had 114k jobs created vs 175k expected. We are now entering correction territory.
I executed some QQQ covered calls at strikes of $470 and $480 expiring two and three weeks from now to capitalize on the short-term volatility. Trying to make a bit of money. QQQ closed at $448.75 today. Let's see if my options stay OTM.
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Quick post this week because I need to tuck the kids into bed. Tesla had a rough week when it reported earnings. Nasdaq overall had a really bad week, so Tesla's miss probably got exaggerated a bit as investors flocked to other small cap stocks.
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I guess fears of Mt Gox holders flooding the market with BTC was overexaggerated. In a move that went against the general tech market, bitcoin rocketed by 17% this week while the Nasdaq posted a loss of 3.6%. Why did the Nasdaq drop so precipitously? Fintwit suggests it was mainly driven by investors rotating out of tech stocks and into other industries and small cap in anticipating of a September rate cut.
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Tesla is scheduled to unveil its Robotaxi concept on 8/8 but now it's expected to be in October.
I don't think this is a launch announcement but rather announcing a project that will probably take 10+ years to materialize. Just like how long it's taking FSD to live up to its promise. We finally have some potential tech to make FSD viable.
https://www.inc.com/reuters/tesla-delays-planned-summer-robotaxi-launch-until-october.html
Tesla finally dug itself out of the hole and is now in positive territory for the year. Tesla reported 443,956 deliveries well above what investors were expecting.
Bitcoin on the other hand, had a tough weak as reports of Mt Gox's bitcoins stash is being return to its customers which investors are speculating may lead to a glut of BTC hitting the market.
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Tesla up more than 8% this week but not sure why. I've been following some prominent Tesla bulls on Twitter and not seeing a reason. Anyone know why? Is it the summer holidays so investors think more people will upgrade to the $99/month FSD, which has $0 marginal cost?
Fairly quiet week across the board. Nothing much to report.
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This week's major announcement is all about Tesla's shareholders voting in FAVOR of Elon's massive pay package, which if you recall was previously approved in 2018 but a Delaware judge tried to block it, and voting in FAVOR of moving the legal entity's domicile to Texas from Delaware.
Both can be seen as bullish events for Tesla but the WoW change was barely changed. There was speculation that Elon would resign from Tesla if the pay package vote failed. I think that concern was overblown because the only source of liquidity for Elon is Tesla currency and he wouldn't want anyone else to guide his nest egg other than him.
Now that this is behind us, the focus will turn back to Tesla's execution and strategy. Will 8/8's Robotaxi announcement blow all our minds or will it be overhyped like all his past announcements?
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Big week ahead for Tesla. Their annual shareholder meeting is being held on June 13 and all eyes are on Robyn Denholm to pull a rabbit out of a hat. Elon has reportedly threatened to leave Tesla, or at the very least not focus his attention and therefore let it whither, if he does not get his pay package even though he's "not motivated by money".
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SaaS Stocks Under Pressure Amid Growth Concerns
Several leading software-as-a-service (SaaS) stocks have seen significant declines recently as investors grow concerned about slowing growth and increased deal scrutiny in the sector.
One of the biggest decliners has been UiPath (PATH), which plunged over 30% on May 31st after lowering its full-year guidance due to elongated sales cycles and "increased deal scrutiny"[1][2][3][4]. The automation software company also announced the abrupt departure of CEO Robert Enslin, with founder Daniel Dines returning as CEO[1][2][3][4]. Analysts cited the "multifaceted" pressures on UiPath, including failed growth investments, macro headwinds, and execution risks from the leadership change[2][3].
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Biggest news this week is Microsoft's Build developer conference. As expected, it was filled with AI. The thing I'm most excited about is the Surface laptop with a Qualcomm chip, NPU and Recall ability.
Below are the top 5 highlights from the conference according to Perplexity:
I was browsing my photo album over lunch today and came across this gem:
On that day, it was the single worst trading day since 1987. Now compare that to the stock market today:
If there was an argument to be made here, it’s that in the long run, most things are usually not as bad as it seems. And vice versa. The human mind and body are quite flexible and can tolerate quite a bit of stress. It helps to keep a long-term mindset to ensure one is mentally and physically healthy. Just like working out one day doesn’t make you an Olympic athlete, but sustained training over a long period of time, will get you darn close.
It’s also tough to bet against America 🇺🇸. As a junior corporate worker in 2008, I applied for the CFA scholarship, which would cover the cost of taking the Level 1 exam, and mentioned in the essay that I don’t believe recessions will last forever and now is the best time to improve one’s skills.
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Short commentary this week because I'm returning from a trip to Dallas (amazing city, loved it). Regularly scheduled programming to resume this week. Always great to see a portfolio up while away on vacation :)
Tough week for Tesla shareholders. Elon decides to layoff the entire supercharger team of 500 staff, putting contractor partners in an awkward position of not knowing who is left at Tesla to contact. Is this a sign of a brilliant genius or the beginning of the end?
I still think the best days are ahead for Tesla shareholders. EV as an industry is facing incredible headwinds that are not unique to Tesla, so it makes sense for Elon to scale back investments in areas that are not directly tied to revenue. Supercharging makes up a small percentage of overall revenue. However, I strongly disagree with the "axe" approach of chopping the entire supercharger division.
With NACS becoming the industry standard in almost all cars sold in the U.S. and Canada starting 2025, it bodes well for Tesla that demand for supercharger network is just around the corner.
August 8 cannot come fast enough!
]]>Tesla Robotaxi unveil on 8/8
— Elon Musk (@elonmusk) April 5, 2024
Whoa, what a week! Elon makes a surprise visit to China and he returns back to the U.S. with approval to operate FSD in China. I always believed that when it comes to AI, Tesla is miles ahead of anyone in real world application with all the video data they collect. If anyone is going to solve autonomous driving, my bet is on Tesla.
MSFT was pretty flat this week despite some news about investing in Malaysia's AI capabilities and some product announcements. They did well on their earnings overall.
Bitcoin seems to have hit a lull since the halving. My guess is probably profit taking from speculators. Interestingly, Huan Ventures has emerged from hibernation and is starting to make investments as noted in The Information. Read more.
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Investors this week liked what they heard from Tesla and Microsoft. Both stocks are up post-earnings.
Sorry, short update today because I have some prior commitments.
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Tesla had a bruising week: Cybertruck issues a recall notice to fix a potential issue with the accelerator sticking and investors are losing confidence that Tesla can continue is pace of growth as EV faces a pullback in demand. Seems Elon is spread thin running Twitter, SpaceX, Boring Company, xAI and Tesla.
On Friday, Nasdaq posted a 2% drop as tech started posting earnings. Netflix said it would stop releasing subscriber numbers which caused a panic among investors fearful that growth is stalling. Nvidia dropped 10% after Supermicro, one of its largest data center customers, and who itself saw its share price crater 25%, said it would not share prelim earnings spooking investors that ride is coming to an end.
Q1'24 earnings is turning out to be quite eventful. Another month of earnings left -- more (bloodshed?) to come!
The markets faced a challenging week, with inflation rising 3.5% in March -- higher than expected. This has led to questions around the Federal Reserve's plans for interest rates this year. Historically, the Fed lowers rates to stimulate the economy and maintain their dual mandate of full employment and 2% inflation. However, with inflation elevated and unemployment low, the path forward is less clear.
Investors were optimistic in the first quarter, driving the S&P 500 up nearly 10%. However, my outlook for the remainder of 2024 is more cautious. I foresee the S&P 500 ending the year roughly flat, around 5,100. Several factors contribute to this view:
These uncertainties are likely to translate to significant market volatility through the year.
In other news, Tesla recently announced a 50% reduction in the monthly cost of its Full Self-Driving (FSD) feature, lowering it to $99 per month. This strategic move should help boost FSD adoption and provide more real-world data to train Tesla's AI systems, which should improve future FSD capabilities. I view this as a positive long-term development for the company.
Overall, the market environment appears challenging in the near-term, but Tesla's FSD update provides a potential bright spot. I will continue to monitor these developments closely.
]]>Supervised full self-driving now $99/month https://t.co/UoZ0MvirxW
— Elon Musk (@elonmusk) April 12, 2024