To The Moon

The market action over the past two days has left me dumbfounded. The overall market sentiment has dramatically shifted to an extremely bullish tone.

By late May, the broad expectation was for a pullback after Nvidia's stock split. But the economic data releases seem to have changed all that, as if preparing for rate cuts.

Looking at options trading, SPY and QQQ appear poised to continue rallying until month-end, unlikely to drop below their current month's opening levels. This shift will upend the pullback expectations for most tech stocks.

$NVIDIA Corp(NVDA)$
On Friday, it's unlikely to close above $1200. It spiked 5% mid-week on TSMC's pricing hikes and ASML's new lithography machine deliveries. Yet there's still a pile of $1150 sell calls for next week - simply exhilarating.

I'm still struggling to adjust my expectations that Nvidia's pullback may be shallower than anticipated. There's a lot of open interest in June call options. I was originally hoping for a pullback below $1000 (split-adjusted $100), but now I have to question that outlook. Will re-assess based on next week's new/open interest.

For risk management ahead of the split, no new option positions this week. Nvidia's handling of the split options is user-friendly. My guess is due to the high open interest, fully deactivating to the old ticker would reduce liquidity and overwhelm market makers, so this approach alleviates that pressure.

$Taiwan Semiconductor Manufacturing(TSM)$
On Monday there was an outrageously bullish $155 $TSM 20240607 155.0 CALL$  trade. Initially dismissed due to ingrained pullback expectations, but it remains open so may get exercised.

Playing the $150-$155 sell put range on TSM works. But selling Nvidia puts post-split will be more capital efficient.

$Apple(AAPL)$
Next week is WWDC, with a large $AAPL 20240621 207.5 CALL$  207.5 call trade. For upside over $200, can sell the $AAPL 20240621 200.0 PUT$ , but may need to manually exit.

$Tesla Motors(TSLA)$
Expected to close the week below $182.5. Tesla has become the most relaxing stock - selling weekly puts + calls nets an easy $200.

On sell calls, no need to worry about striking the wrong level. Every Friday, benevolent whales charitably advertise their large sell orders, pinning the price exactly where needed. True ringleaders are ruthless yet understated.

$GameStop(GME)$

As I was writing, the stock ripped higher. The $40 calls expiring this week have 21,000 contracts open, so it seems the Kitten plans to blow up call sellers on Friday.

Kitten doesn't have much time left. Theoretically, he won't close out his 120,000 option contracts before June 11th to kill the rally. But that's a massive amount to unwind cleanly. Besides outright closing, he could also roll positions, but either path signifies the June frenzy's conclusion.