Trade Alert: Satellite Mind II

A bullish bet on one our top ten names last night, a satellite company.

Why We Care About Our Top Ten Names

For the benefit of new readers: we have 6-month return data for 113 weekly top ten names cohorts, and, on average, they’ve outperformed the market-tracking SPDR S&P 500 Trust (SPY 0.00%↑), +16.10% versus +9.09%, over the next 6 months. Returns can be lumpy, but there’s real alpha here.

Satellite Mind Again

That’s also the title of a Metric song, which is why it came to mind again, given that today’s top names trade is on a satellite company.

We took a loss on our most recent satellite trade, but that company, BlackSky Technology (BKSY 0.00%↑), was nearly a pure-play defense name, and as I mentioned in my exit commentary, Trump’s peacemaking spree this summer seems to have hurt defense names.

A Nice Trade Set-Up Too

The math on today’s more commercial satellite stock trade looks good:

• Cost per contract: < $600

• Max gain: ~200%

• Break even: within ~5% of spot

Heads we win ~2x, tails we lose x—and we don’t need a big move to just put us in the black over the next few months.

Details below.

Today’s Top Names Trade

The company is AST SpaceMobile (ASTS 0.00%↑), and our trade is a combo expiring on November 21st, consisting of these four legs:

1. Buying the $50 strike call,

2. Selling the $65 strike call,

3. Selling the $50 strike put, and

4. Buying the $47 strike put,

For a net debit of $2.80. The max gain on 1 contract is $1,220, the max loss is $580, and the break even is with ASTS at $52.80. This trade filled at $2.70.

Exiting This Trade

My plan:

• ASTS Call spread (legs 1 & 2): open a GTC order to exit at a net credit of $12.

• ASTS Put spread (legs 3 & 4): open a GTC order to exit at a net debit of $0.20.