Volatility
May 24, 2023 | Daily JAM, NVDA, Top 50 Stocks, Volatility |
Nvidia (NVDA) shares were up 19.68% at 4:45 p.m. New York time today, May 24, after the company reported beating analyst estimates on earnings and revenue. The company also told analysts to expect second-quarter revenue way, way above pre-announcement projections. For the three-month period ending April 30, Nvidia earned $1.09 per share, excluding one-time items, as revenue came in at $7.19 billion. Analysts were looking for the company to report earnings of 92 cents a share and $6.28 billion in revenue.
May 17, 2023 | Daily JAM, Special Reports, Volatility |
Investors and the market indexes remain convinced that the economy will dodge a recession, even if only narrowly. Retail companies, however, aren’t nearly so sure. In the last two days, both Home Depot (HD) and Target (TGT) have cut guidance for the quarter(s) ahead. Consumers, they say, are hesitant to take a trip down the aisle devoted t discretionary goods such as furniture and apparel. With the New York Federal Reserve reporting that consumers look increasingly stretched on their credit card balances, I don’t see that reluctance ending soon. So even if the economy as a whole dodges a recession, I think the shares of companies in the consumer discretionary sector are likely to report their own sector-specific recession or the next quarter or two.
May 2, 2023 | Daily JAM, SCHW, Short Term, Volatility |
I’m closing this position on Schwab (SCHW) in my Volatility Portion at a slight loss–I bought these Put Options on March 28 at $3.70 and they traded at $3.50 today May 2–that’s a 5.4% loss. But with the expiration date on these options approaching, I am concerned that the price of the option will fall with time decay.
May 2, 2023 | Daily JAM, KRE, Morning Briefing, Short Term, Volatility |
Yes, it’s a volatile market. Yesterday, May 1, the take from the Wall Street talking heads and JPMorgan Chase CEO Jamie Dimon was that the banking crisis (or at least this stage of it, to be fair to Dimon) was over. Today, May 2, the fear is that the crisis isn’t over. Regional bank stocks have plunged again with Western Alliance Bancorporation (WAL), for example, down 17.12% for the day as of 3 p.m. New York time. The regional bank ETF, the SPDR S&P Regional Banking ETF (KRE) is down 6.61%. That all means that the August 18 Put Options with a strike price of $41 that I bought yesterday at $2.55 are selling at 3 p.m. today at $4.72. Counting a slight gain from yesterday’s action after the buy, these Puts are up 85% in a day. I’m taking that gain today and selling this position out of my Volatility Portfolio
May 1, 2023 | Daily JAM, KRE, Special Reports, Volatility |
JPMorgan Chase’s (JPM) deal today, Monday, May 1, to acquire First Republic Bank (FRC) after the Federal Deposit Insurance Corporation (FDIC) regulators seized the bank certainly puts an end to the First Republic chapter of the banking crisis. But there are lots of chapters to go in this banking crisis. So my second short for this market is to buy Put Options on the SPDR S&P Regional Banking ETF (KRE).
April 26, 2023 | Daily JAM, Jubak Picks, Morning Briefing, MSFT, Top 50 Stocks, Volatility |
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April 14, 2023 | Daily JAM, Short Term, Volatility |
The VIX “fear index,” known more formally as the CBOE S&P 500 Volatility Index (VIX), dropped again today with a retreat of 3.60% taking the index down to a close of 17.16. The VIX, which measures the price that investors and traders are willing to pay in the options market to hedge risk on the Standard & Poor’s 500 in the next month or so, hasn’t been this low in 2022. The prior low for the VIX this year was 17.87 on February 2. You have to go back to December 27, 2021, when the index stood at 17.22 to find a roughly comparable level. With all that lurking out there in the financial world, I find the VIX at 17.16 too good to pass up.
April 5, 2023 | Daily JAM, Dividend Income, DVN, Jubak Picks, Volatility |
Just in case there are readers who don’t watch my videos, but do follow my picks. Today, April 5, I added Devon Energy (DVN) to my Jubak Picks, Dividend, and Volatility Portfolios.
April 5, 2023 | Daily JAM, Dividend Income, Jubak Picks, Volatility |
Today’s Quick Pick is Devon Energy (NYSE: DVN). On Sunday, OPEC+ said it’s going to cut oil production by about 1 million barrels a day. The following Monday saw a surge in oil prices. My take on this? If you’re going to bet on oil, do it now, before the question of whether or not we’ll have a recession starts to hang over the sector. Devon Energy has a similar playbook to Pioneer Resources, a stock I already own. Devon has introduced a variable dividend (50% of post-dividend cash flow) alongside their set dividend payout. About 70% of Devon’s resources are in the Permian Basin, the lowest-cost oil resource in the U.S. oil shale sector. At the moment, the forward yield is about 9.4%, but it is variable and could go up and down. If oil prices continue to go up and Devon decides to produce more oil, cash flow will go up with it. I’ll be adding this to three of my portfolios–Jubak Picks, Dividend, and Volatility to get one more bump in this commodity before we start to worry about an upcoming recession.
April 4, 2023 | AG, Daily JAM, GDX, GLD, GOLD, Jubak Picks, Perfect Five-ETFs, Volatility |
Gold for June delivery closed at 2039.00 an ounce on the Comex today. That’s not too far away from the all-time record high of $2,070 an ounce. The move above $2,000 an ounce and any breach of the record at $2070 could trigger a rally as traders short gold buy to cover positions. That could well be true, but I’d note that this forecast of a gold rally is coming from traders long gold who are trying to talk a rally into being.
March 30, 2023 | ADBE, Daily JAM, Jubak Picks, MSFT, NVDA, Top 50 Stocks, Volatility |
In Step #3 of my Special Report: 5 Moves for the Next 5 Months, on March 24 I added three Big Tech stocks–Microsoft (MSFT), Adobe (ADBE), and Nvidia (NVDA) to my Volatility Portfolio ahead of earnings season. My theory, explained in that post was that we were facing a tough earnings season for most stocks and that reliable earnings growth from Big Tech would make those stocks look like a safe haven in a period when the Standard & Poor’s 500 as a whole was projected to show a drop in earnings. (I also owned up to my mistake in selling Nvidia back on February 16. That was just wrong. More on why I was wrong and why I’ve changed my mind on that in a post tomorrow or so.)
March 30, 2023 | Daily JAM, SCHW, Videos, Volatility |
Today’s Quick Pick is Charles Schwab (NYSE: SCHW) Put Options. Put options will become more valuable as the stock goes down in price. This has been a lousy year for Schwab with the stock currently down about 34% YTD. The reason for this is Schwab makes most of its money on the interest rate spread. Schwab stashes “excess” cash in customer accounts in sweep accounts that pay a very low rate of interest, and Schwab invests that cash in Treasuries, mortgage-backed assets, etc. at higher yields. This works when the overall rate of interest is low because customers have a relatively small incentive to actively move their cash to higher-yielding vehicles. When the Fed raises interest rates, however, some people who had formerly kept their money in these low-return accounts will move their cash to higher-yielding alternatives (often still within Schwab.) This reduces the interest spread that Schwab collects since the company now has to pay more in interest to retain those customers. In addition, Schwab invested that cash in long-term Treasuries and mortgage-backed assets, leaving the company sitting on a lot of unrealized losses in its bond portfolios as bond prices fell as interest rates moved higher. I question whether or not Schwab will be able to meet analysts’ expectations and/or warn on future results when it announces earnings on April 17. I would suggest Put options before the announcement. I added the May 19 Put to my Volatility Portfolio yesterday. For more options plays, subscribe to JubakAM.com.
