Trade Alert: Two Ways To Play The AI Buildout
Bullish options trades on two of our top names from last night, both of which play a role in the AI buildout.
Two Top Names, Two Ways To Play AI’s Buildout
As regular readers may remember, Portfolio Armor’s security selection algorithm has doubled the performance of the SPDR S&P 500 Trust ( SPY 0.00%↑ ) since late 2022. The Portfolio Armor website generates those Top Names and tracks their performance, while this Substack is where we publish the trades we place based on that data.
Today’s alert features two names from last night’s Top Names ranking. One is a previous repeat winner for us: a company that makes the custom-engineered electrical equipment used to distribute, control, and protect power in industrial settings. The other sits much closer to the core of the AI stack: a company that is arguably one of the most important bottlenecks in advanced chipmaking.
A Repeat Winner And A Moat Story
One trade below is a several-month structure on a repeat industrial winner tied to electrification and the physical infrastructure behind AI. The other is a shorter-dated earnings trade on what may be the strongest moat in tech.
In both cases, we’re also taking advantage of relatively high volatility to make these trades more affordable. And because this is not an environment where it makes sense to overpay or chase, we’re using Black-Scholes to estimate fair value, then entering bids on these trades at prices below that fair value. In fact, the repeat winner below appeared in our Top Names earlier this week as well, and we placed a trade on it on Tuesday which didn’t fill. Rather than chase it, we waited for it to reappear in our Top 10 to take another swing at it.
Full details on both trades below.
Today’s First Top Names Trade
Electrical infrastructure / AI power buildout theme
