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- kiangweekiangwee
  ·2021-05-13
  May be time to pick some up!
  Tesla: Beware Of The Unwinding Of The Gamma Squeeze
  Tesla and other EV shares have been under some selling pressure in the last three months, the EV bubble is slowly deflating.Adverse publicity in China and increasing concern about the safety of Tesla’s FSD option is adding to the downdraft.In the company’s recent earnings call, Tesla CEO, Elon Musk, compared it to the logistics of managing World War 2. His claim was perhaps a slight exaggeration, but it illustrates the point.Despite the low-profit margins and past failed attempts by the likes o
  Tesla: Beware Of The Unwinding Of The Gamma Squeeze
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- kiangweekiangwee
  ·2021-04-16
  I’d need to do more research on PLTR before investing!
  Cathie Wood Just Bought These 3 High-Growth Stocks That Could Make You a Fortune
  These tech companies have just one thing in common: They offer potential windfall gains for investors.
  Cathie Wood Just Bought These 3 High-Growth Stocks That Could Make You a Fortune
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His claim was perhaps a slight exaggeration, but it illustrates the point.Despite the low-profit margins and past failed attempts by the likes o","content":"<p><b>Summary</b></p>\n<ul>\n <li>Tesla and other EV shares have been under some selling pressure in the last three months, the EV bubble is slowly deflating.</li>\n <li>Adverse publicity in China and increasing concern about the safety of Tesla’s FSD option is adding to the downdraft.</li>\n <li>Intense competition in key markets and construction delay at the German factory do not help.</li>\n <li>Selling pressure could intensify in the second half of the year as call options expire, reversing last year's gamma squeeze.</li>\n</ul>\n<p>The automotive industry is a highly competitive, capital intensive, low margin business at the best of times. It is also a very difficult business to enter. In addition to massive capital requirements, success in the automotive business demands talented and experienced engineers, a network of factories, and powerful logistics to manage the complexities of the supply chain and manufacturing process.</p>\n<p>In the company’s recent earnings call, Tesla (TSLA) CEO, Elon Musk, compared it to the logistics of managing World War 2. His claim was perhaps a slight exaggeration, but it illustrates the point.</p>\n<p>Despite the low-profit margins and past failed attempts by the likes of Bricklin and DeLorean to enter the business, the promised advent of electric cars has produced a new wave of would-be automakers. Investors have piled into shares of these new entrants hoping to duplicate Tesla’s skyrocketing share performance, driving prices into bubble territory.</p>\n<p>However, Tesla’s financial results continue to demonstrate that the electric car business is no different from the rest of the automotive business. As more competition enters the BEV market prices are squeezed until profit margins are razor-thin. After 16 years of losses, Tesla finally reached profitability, not from selling cars, but from selling regulatory credits to other automakers. I think Tesla has clearly demonstrated that from a profitability viewpoint, electric cars are just cars with a different drive-train and the transformation to electric drives does not change the fundamental nature of the automotive business.</p>\n<p>The EV bubble is now deflating, Tesla is down 30% from its January high. Tesla’s would-be imitators have fared even worse, Lordstown Motors (RIDE) is down 73%, Fisker (FSR) -60%, Canoo (GOEV) – 62%. Tesla’s Chinese competitors' share prices are also falling, despite sharply rising sales. NIO (NIO) is down 40% and XPeng (XPEV) and Li Automotive (LIV) have both fallen more than 50%.</p>\n<p>Against this backdrop of falling share prices among EV companies, Tesla is facing a few headwinds of its own including:</p>\n<ul>\n <li>Adverse publicity resulting from quality and safety issues and a public backlash that will probably impact sales in China, its fastest growth market</li>\n <li>Increasing doubts about the safety and capabilities of Tesla’s Full Self Driving option, and the associated liabilities</li>\n <li>Construction delays at the German factory</li>\n <li>Intense competition from legacy automakers in its key markets</li>\n</ul>\n<p>But there is one factor that does not get the same attention in the media but may have an impact on Tesla’s share price in the second half of this year. It is the potential selling pressure from the high volume of “in the money call” options that expire in the next year – The unwinding of the gamma squeeze that some investors claim was the reason why Tesla’s shares reached their astronomical heights last year.</p>\n<p>Option hedging has a significant impact on Tesla’s share price</p>\n<p>Typical trading volumes for TSLA options are around 1 million contracts per day, equivalent to 100 million shares. Share volumes are around 30 million per day, which includes volume generated by market makers option hedging. With those relative volume levels, options trading is certain to have a significant influence on Tesla’s share price.</p>\n<p><b>Delta hedging and the gamma squeeze</b></p>\n<p>When option market makers sell an option, they hedge their exposure by buying shares (or selling if they are exposed to put options). The number of shares they buy or sell (known as Delta) depends on the relative price movement between the option and its underlying share.</p>\n<p>The value of Delta changes with the share price and the time to expiry. The chart below shows how those changes affect the number of shares that the option market makers buy to hedge their call option exposure. Three curves are shown with one-week, four-week, and one-year expiry dates, the X-axis is the share price relative to the option strike price.</p>\n<p><img src=\"https://static.tigerbbs.com/1f6fe1d60b7cacf9eece9460c672dc8f\" tg-width=\"640\" tg-height=\"408\"><i>Variation of option price with share price and expiry: Data sourced from Option Council</i></p>\n<p>Last year, when Tesla shares were hot, a lot of investors bought long-dated “out of the money” call options which would have been delta hedged by the option market makers. The green curve on the chart above is the delta curve for options with a 1-year expiry. As an example, a $400 call contract ($2,000 pre-split) bought a year ago, would have been on the left edge of the green curve, it would have been hedged at the time with the purchase of about 28 shares.</p>\n<p>If the share price had stayed the same over the past year, those shares would have been gradually sold as the delta curve moved towards the orange and blue curves. However, Tesla's share price has risen and is now about 170% of the $400 call option strike price, the delta is 0.98, another 70 shares have been purchased for hedging.</p>\n<p>This additional share buying for hedging is the \"gamma squeeze\". It has been one of the factors driving the price of Tesla shares upwards, and it will be a factor driving the share price down as the squeeze unwinds with the expiry of the options.</p>\n<p><b>Option expiry and the unwinding of the gamma squeeze</b></p>\n<p>As the expiry date approaches, delta tends to a value of 1.00 for in-the-money options and zero for out-of-the-money options. In theory, market makers would like to be holding, at expiry, one share for every ITM call option minus one share for each ITM put option to which they are exposed.</p>\n<p>If the options are held to expiry, they are exercised and the long or short position transfers to the option holder, with no effect on the market. However, most option holders do not hold the option to expiry, many will sell the option before expiry or hedge the position by buying or selling shares.</p>\n<p>Selling an ITM call option that has a delta of close to 1 causes the market maker to sell 100 shares and selling an ITM put option with a delta of close to 1 causes the market maker to buy 100 shares, so an imbalance between open interest in ITM calls and ITM puts will result in a net sale (or purchase)</p>\n<p>If option trading were the only driver of market prices the share price on expiry would trend towards the point where the open interest in ITM calls equals the open interest in ITM puts. I’ll refer to that as the put/call balance point.</p>\n<p><b>The effect of short expiry versus long expiry options</b></p>\n<p>Most weekly options don’t come to the market until 8 weeks before expiry, they tend to be traded at strike prices close to the share price, so the put/call balance point is usually close to the share price, and the impact on expiry is small.</p>\n<p>But the options that have been on the market for longer, the June, September, and January regular options show a strong imbalance between ITM calls and ITM puts, and much higher overall open interest. Option market makers are holding significant long positions to hedge those ITM calls, and those long positions will unwind as the calls approach expiry, releasing millions of shares onto the market.</p>\n<p>Based on data from May 7th, open ITM call interest in the June 18thoptions exceeds ITM put interest by 170,000 contracts (17 million shares), the balance point is at $440 as shown in the chart below:</p>\n<p><img src=\"https://static.tigerbbs.com/f47d2184c62ffb8f38c4cc633baac772\" tg-width=\"640\" tg-height=\"353\"><i>Open interest in Tesla Calls and Puts that are in the money at various share prices: Source data from Options Council, May 7th.</i></p>\n<p>If this theory is correct, as the upcoming June 18thcall option expiry approaches it will tend to push the Tesla share price towards $440 as the gamma squeeze unwinds, creating downward pressure on the share price.</p>\n<p>This does not all happen on options expiry day, open interest in the June ITM calls has been falling steadily since I started keeping records in February, indicating that some investors have been taking profits already.</p>\n<p><b>A falling share price generates downward gamma</b></p>\n<p>In addition to the effects of options expiry, there is the gamma effect as the share price moves up or down. The delta values move up or down their respective curves and option market makers buy or sell options to maintain their hedges. A falling share price generates selling of shares to unwind option hedges for all options, not just the expiring options, and it has the same directional effect for both puts and calls, i.e. selling when the price moves down and buying when the price moves up. This effect will magnify any downward moves, just as it magnified upward moves as Tesla’s share price rose last year.</p>\n<p>If you Google \"gamma squeeze\" you will find many articles describing how heavy call buying forces share prices up, but very few of those articles mention that the gamma squeeze works in both directions.</p>\n<p><b>Summary and Conclusion</b></p>\n<p>There is a large volume of deep-in-the-money call options purchased during Tesla’s share price run-up last year that will expire June 18th. This option expiry may precipitate selling as the option positions are closed and market makers remove their delta hedges. This will put downward pressure on the share price as the options expire. Further downward pressure is likely as the September and January options move towards expiry.</p>\n<p>Options trading is not the only factor that determines share prices but combined with other factors that appear to be pressuring Tesla’s share price at present, I think this would be a good time to take profits if you hold a long position, and don’t be tempted to buy the dip if the share price drops over the next few weeks.</p>\n<p><b>A note about data source and possible inaccuracies</b></p>\n<p>All the information used to develop the charts, calculations, and conclusions in this article has been downloaded fromThe Options Councilwebsite. The information has some flaws which limit the accuracy of the data.</p>\n<p>Option open interest is posted on the site daily before the market opens. The information posted is total open interest, not net open interest. If someone holds a long call and someone else holds a short call of the same strike and expiry, those positions will post as two open interests. That introduces inaccuracy in the data because we don’t know how much of the stated open interest is long and how much is short.</p>\n<p>However, I believe that most of the long-dated deep-in-the-money calls will be long positions and the conclusions are valid.</p>\n<p>I hold a very small position in July puts.</p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Tesla: Beware Of The Unwinding Of The Gamma Squeeze</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nTesla: Beware Of The Unwinding Of The Gamma Squeeze\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-05-12 15:01 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4427585-tesla-beware-of-the-unwinding-of-the-gamma-squeeze><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nTesla and other EV shares have been under some selling pressure in the last three months, the EV bubble is slowly deflating.\nAdverse publicity in China and increasing concern about the safety...</p>\n\n<a href=\"https://seekingalpha.com/article/4427585-tesla-beware-of-the-unwinding-of-the-gamma-squeeze\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"TSLA":"特斯拉"},"source_url":"https://seekingalpha.com/article/4427585-tesla-beware-of-the-unwinding-of-the-gamma-squeeze","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1139120087","content_text":"Summary\n\nTesla and other EV shares have been under some selling pressure in the last three months, the EV bubble is slowly deflating.\nAdverse publicity in China and increasing concern about the safety of Tesla’s FSD option is adding to the downdraft.\nIntense competition in key markets and construction delay at the German factory do not help.\nSelling pressure could intensify in the second half of the year as call options expire, reversing last year's gamma squeeze.\n\nThe automotive industry is a highly competitive, capital intensive, low margin business at the best of times. It is also a very difficult business to enter. In addition to massive capital requirements, success in the automotive business demands talented and experienced engineers, a network of factories, and powerful logistics to manage the complexities of the supply chain and manufacturing process.\nIn the company’s recent earnings call, Tesla (TSLA) CEO, Elon Musk, compared it to the logistics of managing World War 2. His claim was perhaps a slight exaggeration, but it illustrates the point.\nDespite the low-profit margins and past failed attempts by the likes of Bricklin and DeLorean to enter the business, the promised advent of electric cars has produced a new wave of would-be automakers. Investors have piled into shares of these new entrants hoping to duplicate Tesla’s skyrocketing share performance, driving prices into bubble territory.\nHowever, Tesla’s financial results continue to demonstrate that the electric car business is no different from the rest of the automotive business. As more competition enters the BEV market prices are squeezed until profit margins are razor-thin. After 16 years of losses, Tesla finally reached profitability, not from selling cars, but from selling regulatory credits to other automakers. I think Tesla has clearly demonstrated that from a profitability viewpoint, electric cars are just cars with a different drive-train and the transformation to electric drives does not change the fundamental nature of the automotive business.\nThe EV bubble is now deflating, Tesla is down 30% from its January high. Tesla’s would-be imitators have fared even worse, Lordstown Motors (RIDE) is down 73%, Fisker (FSR) -60%, Canoo (GOEV) – 62%. Tesla’s Chinese competitors' share prices are also falling, despite sharply rising sales. NIO (NIO) is down 40% and XPeng (XPEV) and Li Automotive (LIV) have both fallen more than 50%.\nAgainst this backdrop of falling share prices among EV companies, Tesla is facing a few headwinds of its own including:\n\nAdverse publicity resulting from quality and safety issues and a public backlash that will probably impact sales in China, its fastest growth market\nIncreasing doubts about the safety and capabilities of Tesla’s Full Self Driving option, and the associated liabilities\nConstruction delays at the German factory\nIntense competition from legacy automakers in its key markets\n\nBut there is one factor that does not get the same attention in the media but may have an impact on Tesla’s share price in the second half of this year. It is the potential selling pressure from the high volume of “in the money call” options that expire in the next year – The unwinding of the gamma squeeze that some investors claim was the reason why Tesla’s shares reached their astronomical heights last year.\nOption hedging has a significant impact on Tesla’s share price\nTypical trading volumes for TSLA options are around 1 million contracts per day, equivalent to 100 million shares. Share volumes are around 30 million per day, which includes volume generated by market makers option hedging. With those relative volume levels, options trading is certain to have a significant influence on Tesla’s share price.\nDelta hedging and the gamma squeeze\nWhen option market makers sell an option, they hedge their exposure by buying shares (or selling if they are exposed to put options). The number of shares they buy or sell (known as Delta) depends on the relative price movement between the option and its underlying share.\nThe value of Delta changes with the share price and the time to expiry. The chart below shows how those changes affect the number of shares that the option market makers buy to hedge their call option exposure. Three curves are shown with one-week, four-week, and one-year expiry dates, the X-axis is the share price relative to the option strike price.\nVariation of option price with share price and expiry: Data sourced from Option Council\nLast year, when Tesla shares were hot, a lot of investors bought long-dated “out of the money” call options which would have been delta hedged by the option market makers. The green curve on the chart above is the delta curve for options with a 1-year expiry. As an example, a $400 call contract ($2,000 pre-split) bought a year ago, would have been on the left edge of the green curve, it would have been hedged at the time with the purchase of about 28 shares.\nIf the share price had stayed the same over the past year, those shares would have been gradually sold as the delta curve moved towards the orange and blue curves. However, Tesla's share price has risen and is now about 170% of the $400 call option strike price, the delta is 0.98, another 70 shares have been purchased for hedging.\nThis additional share buying for hedging is the \"gamma squeeze\". It has been one of the factors driving the price of Tesla shares upwards, and it will be a factor driving the share price down as the squeeze unwinds with the expiry of the options.\nOption expiry and the unwinding of the gamma squeeze\nAs the expiry date approaches, delta tends to a value of 1.00 for in-the-money options and zero for out-of-the-money options. In theory, market makers would like to be holding, at expiry, one share for every ITM call option minus one share for each ITM put option to which they are exposed.\nIf the options are held to expiry, they are exercised and the long or short position transfers to the option holder, with no effect on the market. However, most option holders do not hold the option to expiry, many will sell the option before expiry or hedge the position by buying or selling shares.\nSelling an ITM call option that has a delta of close to 1 causes the market maker to sell 100 shares and selling an ITM put option with a delta of close to 1 causes the market maker to buy 100 shares, so an imbalance between open interest in ITM calls and ITM puts will result in a net sale (or purchase)\nIf option trading were the only driver of market prices the share price on expiry would trend towards the point where the open interest in ITM calls equals the open interest in ITM puts. I’ll refer to that as the put/call balance point.\nThe effect of short expiry versus long expiry options\nMost weekly options don’t come to the market until 8 weeks before expiry, they tend to be traded at strike prices close to the share price, so the put/call balance point is usually close to the share price, and the impact on expiry is small.\nBut the options that have been on the market for longer, the June, September, and January regular options show a strong imbalance between ITM calls and ITM puts, and much higher overall open interest. Option market makers are holding significant long positions to hedge those ITM calls, and those long positions will unwind as the calls approach expiry, releasing millions of shares onto the market.\nBased on data from May 7th, open ITM call interest in the June 18thoptions exceeds ITM put interest by 170,000 contracts (17 million shares), the balance point is at $440 as shown in the chart below:\nOpen interest in Tesla Calls and Puts that are in the money at various share prices: Source data from Options Council, May 7th.\nIf this theory is correct, as the upcoming June 18thcall option expiry approaches it will tend to push the Tesla share price towards $440 as the gamma squeeze unwinds, creating downward pressure on the share price.\nThis does not all happen on options expiry day, open interest in the June ITM calls has been falling steadily since I started keeping records in February, indicating that some investors have been taking profits already.\nA falling share price generates downward gamma\nIn addition to the effects of options expiry, there is the gamma effect as the share price moves up or down. The delta values move up or down their respective curves and option market makers buy or sell options to maintain their hedges. A falling share price generates selling of shares to unwind option hedges for all options, not just the expiring options, and it has the same directional effect for both puts and calls, i.e. selling when the price moves down and buying when the price moves up. This effect will magnify any downward moves, just as it magnified upward moves as Tesla’s share price rose last year.\nIf you Google \"gamma squeeze\" you will find many articles describing how heavy call buying forces share prices up, but very few of those articles mention that the gamma squeeze works in both directions.\nSummary and Conclusion\nThere is a large volume of deep-in-the-money call options purchased during Tesla’s share price run-up last year that will expire June 18th. This option expiry may precipitate selling as the option positions are closed and market makers remove their delta hedges. This will put downward pressure on the share price as the options expire. Further downward pressure is likely as the September and January options move towards expiry.\nOptions trading is not the only factor that determines share prices but combined with other factors that appear to be pressuring Tesla’s share price at present, I think this would be a good time to take profits if you hold a long position, and don’t be tempted to buy the dip if the share price drops over the next few weeks.\nA note about data source and possible inaccuracies\nAll the information used to develop the charts, calculations, and conclusions in this article has been downloaded fromThe Options Councilwebsite. The information has some flaws which limit the accuracy of the data.\nOption open interest is posted on the site daily before the market opens. The information posted is total open interest, not net open interest. If someone holds a long call and someone else holds a short call of the same strike and expiry, those positions will post as two open interests. That introduces inaccuracy in the data because we don’t know how much of the stated open interest is long and how much is short.\nHowever, I believe that most of the long-dated deep-in-the-money calls will be long positions and the conclusions are valid.\nI hold a very small position in July puts.","news_type":1},"isVote":1,"tweetType":1,"viewCount":56,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":370851717,"gmtCreate":1618575680839,"gmtModify":1704712945702,"author":{"id":"3577863885818183","authorId":"3577863885818183","authorIdStr":"3577863885818183","name":"kiangwee","avatar":"https://static.itradeup.com/news/e37df25a52e5906b67cd8ed0b9802dc9","crmLevel":5,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3577863885818183"},"themes":[],"htmlText":"I’d need to do more research on PLTR before investing!","listText":"I’d need to do more research on PLTR before investing!","text":"I’d need to do more research on PLTR before investing!","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/370851717","repostId":"2127007505","repostType":4,"repost":{"id":"2127007505","pubTimestamp":1618562461,"share":"https://ttm.financial/m/news/2127007505?lang=&edition=fundamental","pubTime":"2021-04-16 16:41","market":"us","language":"en","title":"Cathie Wood Just Bought These 3 High-Growth Stocks That Could Make You a Fortune","url":"https://stock-news.laohu8.com/highlight/detail?id=2127007505","media":"Motley Fool","summary":"These tech companies have just one thing in common: They offer potential windfall gains for investors.","content":"<p>Cathie Wood has been around Wall Street for decades, but the founder and CEO of ARK Investment Management took the spotlight in 2020 when her five flagship exchange-traded funds (ETFs) crushed the broader market, each generating returns of over 100% for the year. Those tremendous results made investors sit up and take notice.</p>\n<p>Given her results in 2020, it's worth watching what Wood is buying -- even if some of those stocks may not exactly be your cup of tea. To further increase my chances of finding winning investments from among her picks, I look for companies that boast industry-leading positions, robust secular tailwinds, and large and growing total addressable markets.</p>\n<p>Three stocks Wood bought last week meet all of those lofty criteria.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/bba4bdedb6fc0d1201a2ee137c8921bb\" tg-width=\"700\" tg-height=\"450\"><span>Image source: Getty Images.</span></p>\n<h2>Okta: The cutting edge of identity management</h2>\n<p>The <b><a href=\"https://laohu8.com/S/ARKW\">ARK Next Generation Internet ETF</a></b> (NYSEMKT:ARKW) focuses on companies that will benefit from broad technological trends including cloud computing, mobile communication, big data, and the Internet of Things. One of the biggest stumbling blocks for companies looking to make use of many of those technologies is the prevalence of hacking and unauthorized access that plagues the modern era. Ensuring that only those with the proper credentials can access critical networks is a big job, and <b>Okta</b> (NASDAQ:OKTA) is there to answer the call.</p>\n<p>The company is the leader in cloud-based identity management and authentication services. Okta manages access across any application, person, or device, and handles not only employees, but also serves as the gatekeeper allowing partners, contractors, and customers to access those systems they are authorized to use. Rather than simply connecting to a company's network, Okta integrates with more than 6,500 of the most-used enterprise software applications, including <b>Amazon</b>&nbsp;Web Services, <b>salesforce.com</b>, <b><a href=\"https://laohu8.com/S/ZM\">Zoom</a> Video Communications</b>, and <b>Microsoft</b> Office 365.</p>\n<p>Okta has been named the industry leader in its niche for seven years running by research company <b>Gartner</b>. It was also singled out by Forrester as a leader in the field for both its Identity-as-a-Service (IDaaS) and its Zero Trust eXtended Ecosystem. These industry accolades help illustrate the value of Okta's offerings.</p>\n<p>If you need further evidence, look no further than its recent results. Okta's revenue increased 43% last year, while subscriptions climbed 44%. The company's remaining performance obligation (RPO) -- which represents revenue that is under contract but has not yet been recognized -- grew even faster, by 49%, which signals the trajectory of its future growth.</p>\n<p>With the acquisition of Auth0 last month, Okta expanded its addressable market from $55 billion to $80 billion. Considering that it generated revenue of just $835 million last year, even if the company only captures a small part of its total addressable market, the stock could grow several-fold from here.</p>\n<p>Wood only opened a position in Okta last week, so this could be the beginning of a long and lucrative association.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/f8b0c83b8a99bffdb138bb49c36053ae\" tg-width=\"700\" tg-height=\"356\"><span>Image source: Getty Images.</span></p>\n<h2>The Trade Desk: No cookies in its diet</h2>\n<p>Another trend that still has legs is the transition to digital advertising -- and more specifically, <i>programmatic</i> advertising. To ensure that it has exposure to this large and growing trend, the ARK Next Generation Internet ETF is betting big on <b>The Trade Desk</b> (NASDAQ:TTD).</p>\n<p>Not only is the company the leading independent demand-side advertising platform, but it partners with the world's largest ad agencies rather than competing against them. This gives The Trade Desk a large and growing ecosystem in which to expand its market share.</p>\n<p>While the digital advertising industry is up in arms due to <b>Alphabet</b>'s announcement regarding the pending death of cookies and <b>Apple</b>'s moves to increase user privacy, The Trade Desk is uniquely positioned to sidestep most of the issues those changes will create.</p>\n<p>First, only about 8% of its advertising spend is reliant on Apple's Identifier for Advertisers (IDFA), so the tech giant's plans to essentially kill it won't materially impact The Trade Desk's business. Second, and perhaps more importantly, The Trade Desk has long prepared for the demise of cookies. The company developed the Unified ID, an identifier that helps target ads, but doesn't contain any personally identifiable information, so it doesn't invade user privacy.</p>\n<p>The most important names in the industry use The Trade Desk's Unified ID, including Index Exchange, <b>Magnite</b>, <b>PubMatic</b>, OpenX, SpotX, <b>Criteo</b>, <b>LiveRamp</b>, and Neustar, just to name a few.</p>\n<p>In the fourth quarter, The Trade Desk grew revenue by 48% year over year -- its highest growth rate in nearly two years -- while net income nearly tripled. The company's total revenue last year hit $836 million, which pales in comparison to its total addressable market of $1 trillion annually in the coming decade.</p>\n<p>These factors no doubt led Wood to increase ARK Next Generation Internet ETF's position in The Trade Desk last week, bringing it to 2.28% of the total $5.27 billion funds under management, and making it the fund's 13th largest position.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/8879046bbfe592f08b387aca6b54b4e0\" tg-width=\"700\" tg-height=\"393\"><span>Image source: Getty Images.</span></p>\n<h2>Palantir Technologies: Finding needles in haystacks</h2>\n<p>The <b><a href=\"https://laohu8.com/S/ARKK\">ARK Innovation ETF</a></b> (NYSEMKT:ARKK) focuses on disruptive technology that could potentially change the way the world works, which is likely why it was attracted by <b>Palantir Technologies </b>(NYSE:PLTR). It can take years, sometimes decades, to develop the necessary tools to gather, consolidate, and analyze data trapped in silos. These problems have plagued enterprise companies and governments alike. While Palantir has been public for less than a year, it has been building its data mining and warehousing tools for nearly 20 years -- and it has an extensive tech pedigree.</p>\n<p>Palantir is the brainchild of Peter Thiel, <a href=\"https://laohu8.com/S/AONE\">one</a> of the co-founders of <b><a href=\"https://laohu8.com/S/PYPL\">PayPal</a></b> (NASDAQ: PYPL), so disruptive technology is right up his alley. The company has been helping defense and intelligence agencies crunch data in the fight against terrorism for years, and has an impressive track record of capturing lucrative government contracts. But that's just the beginning. After honing its craft with the government, Palantir turned its sights to the enterprise market, helping to extract meaningful and actionable data for businesses.</p>\n<p>The company's software is exceedingly complex and requires an entire team of engineers to install. Once Palantir's platform is entrenched in a customer's systems, it's highly unlikely that a rival data miner would be able to come in and lure that client away, even if there were a competitor of Palantir's magnitude.</p>\n<p>The company grew revenue by 47% in 2020, winning a host of new and increasingly lucrative contracts along the way. The average annual revenue from the company's top 20 customers grew by 34%, while the number of those generating $1 million or more in revenue grew 32%. Additionally, the number of clients contributing $5 million or more grew 54%, while the number generating $10 million grew by 50%.</p>\n<p>Palantir's management estimates its total addressable market tops out at $119 billion annually across both its commercial and government segments. Given that the company generated revenue of just $1.1 billion in 2020, it clearly has ample opportunities for growth.</p>\n<p>Wood has gradually been building a position in Palantir. It's now <a href=\"https://laohu8.com/S/AONE.U\">one</a> of the top 25 holdings in the ARK Innovation ETF, with its stake amounting to 1.4% of its $17.68 billion funds under management.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/7d0fdf843d9d47d4facbb2b8f882495a\" tg-width=\"720\" tg-height=\"468\"><span>Data by YCharts</span></p>\n<h2>Every rose has its thorns</h2>\n<p>Given the impressive results Wood racked up last year, it would almost seem like a no-brainer to follow her lead, but her noteworthy record notwithstanding, these stocks simply aren't for everyone. In terms of traditional valuation metrics, they certainly aren't cheap. The Trade Desk, Okta, and Palantir are selling at price-to-sales ratios of 41, 37, and 25, respectively -- when a good price-to-sales ratio for a stock is generally between 1 and 2.</p>\n<p>That said, these industry-leading companies have plenty going for them, including robust tailwinds and massive market opportunities. Additionally, The Trade Desk and Okta gained 230% and 90%, respectively, over the past year, and Palantir is up by 145% since it debuted on Sept. 30.</p>\n<p>For investors who can stomach volatility and have an appetite for a little additional risk, Wood's recent purchases could be just the ticket.</p>","source":"fool_stock","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Cathie Wood Just Bought These 3 High-Growth Stocks That Could Make You a Fortune</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nCathie Wood Just Bought These 3 High-Growth Stocks That Could Make You a Fortune\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-04-16 16:41 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.fool.com/investing/2021/04/15/cathie-wood-just-bought-these-3-high-growth-stocks/><strong>Motley Fool</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Cathie Wood has been around Wall Street for decades, but the founder and CEO of ARK Investment Management took the spotlight in 2020 when her five flagship exchange-traded funds (ETFs) crushed the ...</p>\n\n<a href=\"https://www.fool.com/investing/2021/04/15/cathie-wood-just-bought-these-3-high-growth-stocks/\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"OKTA":"Okta Inc.","PLTR":"Palantir Technologies Inc.","TTD":"Trade Desk Inc."},"source_url":"https://www.fool.com/investing/2021/04/15/cathie-wood-just-bought-these-3-high-growth-stocks/","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2127007505","content_text":"Cathie Wood has been around Wall Street for decades, but the founder and CEO of ARK Investment Management took the spotlight in 2020 when her five flagship exchange-traded funds (ETFs) crushed the broader market, each generating returns of over 100% for the year. Those tremendous results made investors sit up and take notice.\nGiven her results in 2020, it's worth watching what Wood is buying -- even if some of those stocks may not exactly be your cup of tea. To further increase my chances of finding winning investments from among her picks, I look for companies that boast industry-leading positions, robust secular tailwinds, and large and growing total addressable markets.\nThree stocks Wood bought last week meet all of those lofty criteria.\nImage source: Getty Images.\nOkta: The cutting edge of identity management\nThe ARK Next Generation Internet ETF (NYSEMKT:ARKW) focuses on companies that will benefit from broad technological trends including cloud computing, mobile communication, big data, and the Internet of Things. One of the biggest stumbling blocks for companies looking to make use of many of those technologies is the prevalence of hacking and unauthorized access that plagues the modern era. Ensuring that only those with the proper credentials can access critical networks is a big job, and Okta (NASDAQ:OKTA) is there to answer the call.\nThe company is the leader in cloud-based identity management and authentication services. Okta manages access across any application, person, or device, and handles not only employees, but also serves as the gatekeeper allowing partners, contractors, and customers to access those systems they are authorized to use. Rather than simply connecting to a company's network, Okta integrates with more than 6,500 of the most-used enterprise software applications, including Amazon Web Services, salesforce.com, Zoom Video Communications, and Microsoft Office 365.\nOkta has been named the industry leader in its niche for seven years running by research company Gartner. It was also singled out by Forrester as a leader in the field for both its Identity-as-a-Service (IDaaS) and its Zero Trust eXtended Ecosystem. These industry accolades help illustrate the value of Okta's offerings.\nIf you need further evidence, look no further than its recent results. Okta's revenue increased 43% last year, while subscriptions climbed 44%. The company's remaining performance obligation (RPO) -- which represents revenue that is under contract but has not yet been recognized -- grew even faster, by 49%, which signals the trajectory of its future growth.\nWith the acquisition of Auth0 last month, Okta expanded its addressable market from $55 billion to $80 billion. Considering that it generated revenue of just $835 million last year, even if the company only captures a small part of its total addressable market, the stock could grow several-fold from here.\nWood only opened a position in Okta last week, so this could be the beginning of a long and lucrative association.\nImage source: Getty Images.\nThe Trade Desk: No cookies in its diet\nAnother trend that still has legs is the transition to digital advertising -- and more specifically, programmatic advertising. To ensure that it has exposure to this large and growing trend, the ARK Next Generation Internet ETF is betting big on The Trade Desk (NASDAQ:TTD).\nNot only is the company the leading independent demand-side advertising platform, but it partners with the world's largest ad agencies rather than competing against them. This gives The Trade Desk a large and growing ecosystem in which to expand its market share.\nWhile the digital advertising industry is up in arms due to Alphabet's announcement regarding the pending death of cookies and Apple's moves to increase user privacy, The Trade Desk is uniquely positioned to sidestep most of the issues those changes will create.\nFirst, only about 8% of its advertising spend is reliant on Apple's Identifier for Advertisers (IDFA), so the tech giant's plans to essentially kill it won't materially impact The Trade Desk's business. Second, and perhaps more importantly, The Trade Desk has long prepared for the demise of cookies. The company developed the Unified ID, an identifier that helps target ads, but doesn't contain any personally identifiable information, so it doesn't invade user privacy.\nThe most important names in the industry use The Trade Desk's Unified ID, including Index Exchange, Magnite, PubMatic, OpenX, SpotX, Criteo, LiveRamp, and Neustar, just to name a few.\nIn the fourth quarter, The Trade Desk grew revenue by 48% year over year -- its highest growth rate in nearly two years -- while net income nearly tripled. The company's total revenue last year hit $836 million, which pales in comparison to its total addressable market of $1 trillion annually in the coming decade.\nThese factors no doubt led Wood to increase ARK Next Generation Internet ETF's position in The Trade Desk last week, bringing it to 2.28% of the total $5.27 billion funds under management, and making it the fund's 13th largest position.\nImage source: Getty Images.\nPalantir Technologies: Finding needles in haystacks\nThe ARK Innovation ETF (NYSEMKT:ARKK) focuses on disruptive technology that could potentially change the way the world works, which is likely why it was attracted by Palantir Technologies (NYSE:PLTR). It can take years, sometimes decades, to develop the necessary tools to gather, consolidate, and analyze data trapped in silos. These problems have plagued enterprise companies and governments alike. While Palantir has been public for less than a year, it has been building its data mining and warehousing tools for nearly 20 years -- and it has an extensive tech pedigree.\nPalantir is the brainchild of Peter Thiel, one of the co-founders of PayPal (NASDAQ: PYPL), so disruptive technology is right up his alley. The company has been helping defense and intelligence agencies crunch data in the fight against terrorism for years, and has an impressive track record of capturing lucrative government contracts. But that's just the beginning. After honing its craft with the government, Palantir turned its sights to the enterprise market, helping to extract meaningful and actionable data for businesses.\nThe company's software is exceedingly complex and requires an entire team of engineers to install. Once Palantir's platform is entrenched in a customer's systems, it's highly unlikely that a rival data miner would be able to come in and lure that client away, even if there were a competitor of Palantir's magnitude.\nThe company grew revenue by 47% in 2020, winning a host of new and increasingly lucrative contracts along the way. The average annual revenue from the company's top 20 customers grew by 34%, while the number of those generating $1 million or more in revenue grew 32%. Additionally, the number of clients contributing $5 million or more grew 54%, while the number generating $10 million grew by 50%.\nPalantir's management estimates its total addressable market tops out at $119 billion annually across both its commercial and government segments. Given that the company generated revenue of just $1.1 billion in 2020, it clearly has ample opportunities for growth.\nWood has gradually been building a position in Palantir. It's now one of the top 25 holdings in the ARK Innovation ETF, with its stake amounting to 1.4% of its $17.68 billion funds under management.\nData by YCharts\nEvery rose has its thorns\nGiven the impressive results Wood racked up last year, it would almost seem like a no-brainer to follow her lead, but her noteworthy record notwithstanding, these stocks simply aren't for everyone. In terms of traditional valuation metrics, they certainly aren't cheap. The Trade Desk, Okta, and Palantir are selling at price-to-sales ratios of 41, 37, and 25, respectively -- when a good price-to-sales ratio for a stock is generally between 1 and 2.\nThat said, these industry-leading companies have plenty going for them, including robust tailwinds and massive market opportunities. Additionally, The Trade Desk and Okta gained 230% and 90%, respectively, over the past year, and Palantir is up by 145% since it debuted on Sept. 30.\nFor investors who can stomach volatility and have an appetite for a little additional risk, Wood's recent purchases could be just the ticket.","news_type":1},"isVote":1,"tweetType":1,"viewCount":33,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"defaultTab":"posts","isTTM":true}