Trade Alert: AI Panic, Real Cash Flows
Bullish options bets on Portfolio Armor Top Names in energy and infrastructure that AI can't replace.
AI Panic And Real Assets
In our previous post, “The Substack Post That Sank The Market,” we looked at how one AI doomsday scenario helped knock a few hundred billion off software and other white-collar-heavy names in a day.
The basic worry there is that AI eats human intelligence as an input—turning a lot of white-collar work into GPU time—and that this eventually feeds into weaker consumer spending, fiscal strain, and all the rest.
Yesterday’s trade alert pointed in a different direction.
We took a position in a tungsten miner that finished the day up roughly five percent while the “AI scare trade” was hitting anything tied closely to white-collar payrolls. AI can generate code, copy, and slide decks; it cannot generate tungsten. You still need hard, dense metal that can handle heat and wear to build out data centers, power infrastructure, and all the other real-world stuff AI ultimately runs on.
Two Top Names AI Can’t Replace
Today’s trades follow the same basic logic. We are using options structures on two names from Portfolio Armor’s Top Names list that sit in industries AI can enhance, but not replace. One is an energy name tied to the fuel that keeps the lights on when everyone’s inference clusters spin up. The other is a global materials and construction name that is literally pouring the concrete and producing the inputs for physical build-out. If the “intelligence crisis” scenario is even directionally right about where the world is going, those are the kinds of businesses that should still matter on the other side of an AI downturn.
Letting Volatility Work For Us
As usual, we are not just buying calls and hoping for the best. In both cases we are using multi-leg options structures designed to harvest elevated volatility—selling near-dated calls and puts around catalysts while owning longer-dated upside, and pairing short puts with lower-strike long puts to keep our downside defined.
Before setting our max net debits, we ran the legs through Black–Scholes with each option’s implied volatility to estimate fair value, and then set our limit prices below that, so we’re not overpaying just because spreads are wide or quotes are noisy. If the AI story plays out anything like the scenario that spooked the market, a lot of white-collar income streams may prove fragile. The cash flows tied to fuel, concrete, and heavy materials will be less so. Today’s trades are one way of leaning into that distinction while letting implied volatility work for us rather than against us.
Today’s First Top Names Trade
AI power / fossil baseload theme
