Trade Alert: Top Names

Bullish options trades on four of our top ten names.

Portfolio Armor’s Top Ten Names

As regular readers know, Portfolio Armor’s top ten names have, on average, outperformed the market significantly since I started this Substack in December of 2022. Since then, we have full, 6-month performance data on 74 weekly top names cohorts. On average, our top names have returned 18.57% over the next 6 months, versus 12.72% for the SPDR S&P 500 Trust (SPY 0.00%↑).

Tesla Wasn’t A Top Name For Most Of This Year

Since recent price performance is one of the factors Portfolio Armor’s security selection algorithm uses, Tesla (TSLA 0.00%↑) didn’t appear as a top name for most of this year, but we’ve had some success trading it earlier this year using other signals:

1. Call spread on Tesla (TSLA 9.19%↑). Entered at a net debit of $1.63 on 4/8/2024; exited at net credit of $4.74 on 11/8/2024. Profit: 191%.

2. Call spread on Tesla (TSLA -0.61%↓). Entered at a net credit of $1.50 on 7/11/2024; options expired worthless on 7/19/2024. Profit: 150%.

3. Call spread on Tesla (TSLA 8.44%↑). Entered at a net debit of $0.83 on 10/14/2024; exited at a net credit of $2.96 on 10/24/2024. Profit: 196%.

One Of Our Post-Election Trump Trades

Tesla was one of four post-election Trump trades included in this post earlier this month.

All four names in that post had two things in common: they had been a Portfolio Armor top ten name the night before, and they stood to benefit from Trump’s reelection.

For example, one of the four was Robinhood Markets, which should benefit from loser crypto regulation under Trump. We exited half of that trade on Monday.

1. Calls on Robinhood Markets (HOOD -0.95%↓). Bought for $1.70 on 11/12/2024; sold (half) for $6 on 11/25/2024. Profit: 253%.

The logic behind Tesla being a Trump trade was pretty simple: Tesla (and SpaceX) have been targets of lawfare by the Biden Administration, and under Trump, all that should go away. Elon Musk has gone from a Trump supporter to practically part of the Trump family. President Trump’s niece Kai calls him “Uncle Elon”; when President Trump went to the UFC this month with his two oldest sons as part of his entourage, it was Elon Musk who sat next to him at cage side.

Our Number One Name Now

As of Monday’s close, Tesla was Portfolio Armor’s #1 name again, so we’re going to place another bullish options bet on it today. In addition to Tesla, we’re going to place bullish bets on three other stocks in our current top ten:

• A picks & shovels play on AI.

• An insurance company powered by AI.

• A consumer finance company that should benefit from lower rates.

In each case, we’ll be using call spreads expiring 4-to-6 months out, and we’ll be aiming for price targets slightly lower than those suggested by the current at-the-market straddle (i.e. the current range expected by the options market).

We’ll be aiming for gains of 200% to 400% if we’re right, and if we’re wrong, our max loss on each trade will be 100%.

Details below.

Top Names Trade #1