Trade Alert: Policy Confusion And Insider Buying
Taking advantage of both with bullish options trades on two different names. Plus, a Top Names trade, and a bonus venture investment.
Policy Confusion…
Using defined-risk structures to lean into policy distortions and insider buying
Markets hate ambiguity almost as much as they hate bad news. We saw that again this week when a wire story about U.S. critical-mineral policy triggered a sharp after-hours selloff in one of the key rare earth names, even though the company quickly clarified that nothing about its binding contract with Washington had changed. The narrative was “the government might be backing away”; the fine print was “the existing price protection remains fully in force.”
That kind of mismatch between headlines and reality is exactly where policy-linked trades tend to show up. If you followed my post about the U.S. taking a stake in a rare earths producer, you know the broad idea: Washington is trying to rebuild a domestic supply chain in a handful of strategic sectors, and the stocks tied to those efforts don’t always move in straight lines. News hits, algorithms react, and then a few hours or days later the lawyers’ language catches up.
…And A Chairman’s Vote Of Confidence
We’re also seeing a different kind of signal in a much smaller name: a chairman stepping in to buy a large block of shares in the open market, at a level that now looks like a ceiling over current prices. Insiders can be wrong, but when someone close to the business writes a big personal check for stock, they usually aren’t guessing about what the next earnings report is going to say.
Today’s trades lean into both of those situations. In the first, we’re taking a defined-risk, partially financed shot on a U.S. rare earths producer that just got whipsawed by policy confusion, using a four-leg structure that gives us a shot at ~2x upside relative to our risk. In the second, we’re effectively turning a recent insider purchase into our own reference point—using a risk-reversal that leaves us willing to own the stock near the chairman’s buy level, with longer-dated calls on top if the market decides he was early rather than wrong.
…And Top Names Trade Too
At the same time, the calendar for big “event” releases over the next couple of quarters is finally starting to look interesting again, and that doesn’t just matter for the studios. The businesses that sit between Hollywood and the end customer—those that monetize premium large-format screens, outsized opening weekends, and global distribution—stand to benefit if even a handful of upcoming titles outperform expectations. In the paid section, I’m using a defined-risk options structure on one of the more compelling names in that space, with a near-term earnings catalyst and a technical setup that passes our screens.
Details on all three are in the paid section below, along with a bonus venture investment.
Today’s First Market Watchers Trade
Reindustrialization / strategic rare earths theme
