Over the weekend I posted that I’d be looking at a possible buy of Call Options on the CBOE S&P 500 Volatility Index (VIX) today–depending on how the VIX behaved in the Monday action. Today the VIX regained some of the ground that it gave up last week, closing ahead 1.92% to 1701 after closing at 16.69 on Friday. And I’m going to hold off on buying VIX Call Options until I see the trend in first quarter earnings reports.
Today, I’m going to review the fundamental case for Wyndham shares (the reason I added it to Jubak Picks on March 17) and give you the details on the Call Option on Wyndham that I’ll be adding to my Volatility Portfolio tomorrow.
The one certainty in the stock market right now, I’d say, is volatility. Both to the upside and to the downside. So I think we should take what the market is giving us. Using these three moves in the short term.
Tomorrow, March 24, I’m going to add another hedge against a drop in stock prices, one that’s a more general market hedge against a more general market decline. The hedge is the September 17 Put Option (which goes up in price as the share price goes down) on the small cap Russell 2000 Index using the iShares MSCI Russell 2000 ETF.
I’d like to add more exposure to the bank sector. But what? At this stage in the bank stock rally, I’m looking for well-run banks that will be able to take advantage of the increase in the yield spread to add to earnings. (As opposed to earlier in the cycle, when I added Citigroup because things were getting a lot better even for not-so-well run banks.) Bank of America (BAC) is one possibility. But the stock is up 25.80% for 2021 as of March 18 and up 32.26% in the last month. I think, instead, that I’ll go with U.S. Bancorp (USB), the country’s largest regional bank. U.S. Bancorp is up 16.96% for 2021 to date and up “only” 21.27% in the last month. It also comes with a 3.8% dividend (well above the 1.90% paid by Bank of America) that will give investors some downside protection. I’m adding that stock to my Jubak Picks Portfolio on Friday.
Weekly options, monthly options, quarterly options, and even futures contracts all expire tomorrow.
I’m starting up my videos on JubakAM.com again–this time using YouTube as a platform. The fourteenth YouTube video “3 Picks for Continued Volatility” went up today.
Last time, way back on February 23, when I posted on an everything is down market, I said that I didn’t think we were yet at buy on the dip time, but that I was doing a little selective nibbling at stocks such as Applied Materials (AMAT) that had extraordinarily strong 2012 growth stories. Well, I’ve been doing a little nibbling today–again I’m not buying everything on the drop since I can’t tell where the bottom might be.
I’m very reluctant to go bottom fishing here–since I can’t tell where the bottom might be and the one-day losses are significant here. Tesla (TSLA), for example, was down 8.06% TODAY. That’s $59.80 dollars a share. Teladoc (TDOC) dropped 13.74% or $34.98 a share. Guessing wrong on a bottom could be very expensive here. But I am willing to try a few trades. Nothing fancy. Very short-term. But using stocks with very strong longer-term stories that make me feel good about the longer-term prospects for the stocks. And to believe that there are significant numbers of potential bargain hunters hiding in the bushes. So, for example, I’ve been trading in and out of the Call Options on Applied Materials (AMAT).
Ok, I don’t want to see “the next GameStop under every rock.” But Vaxart (VXRT) deserves a look or two. (The stock is a member of my Volatility Portfolio where it’s up 5.27 as of the close on February 1 since I added it to the portfolio on July 22, 2020. I also own shares in my personal portfolio.) Here’s what I see with the shares of this company that is in clinical trials of a vaccine for the coronavirus. Vaxart’s vaccine is a pill and it’s the only vaccine pill under development. Shares of Vaxart are up (as of the February 1 close) 54.93% in the last week and 172.68% in the last month. They’ve added 216.46% in the last 3 months and are up 172.68% for 2021 to date as of the close on February 1. The shares moved up another 29.97% today to $15.57 a share.
I looked at my Jubak Picks Portfolio with more than a tinge of seller’s remorse this morning. I sold shares of First Majestic Silver (AG) out of that portfolio on Friday, January 29, after the stock rose 21.38% on Thursday. That gave me a gain of 45.52% since I began this position on July 6, 2019.I argued in justification for this sell that the attempt by individual investors on Reddit’s WallStreetBets forum to force a short squeeze in silver, as they had in GameStop (GME), were likely to fail because there was such a big stockpile of physical silver ready to enter the market. So I took my profit. Only to have the stock climb an other 21.3% today, February 1, as of 2:30 p.m. New York time as individual investors did indeed drive up the price of silver futures. The Shares Silver Trust (SLV) was up 6.40% as of 2:30 New York time today as the intraday price of silver limbed to the highest level since 2013. And then I thought about that seller’s remorse.