Trading The Bottlenecks
Despite Friday's wobble, the market continues to reward this approach.
Trading The Bottlenecks
On Monday, we wrote about “Trading The Blockade”.
The point was simple: this market keeps rewarding investors who focus on bottlenecks.
Some are geopolitical bottlenecks: the Strait of Hormuz, oil flows, shipping, LNG, energy infrastructure, and the second-order inflation pressure from higher energy costs.
Some are AI bottlenecks: electricity, grid capacity, semiconductors, optics, photonics, cooling, space infrastructure, and the physical supply chains.
By Friday, both themes were still driving the tape.
Oil and rates pressured risk assets into the close. AI winners wobbled after a huge run. But the broader lesson from the week didn’t change: the market is still being pulled toward scarce capacity, hard infrastructure, and companies that sit near the chokepoints.
That’s where we kept trading.
Monday:
These trades were tied to freight/logistics, photonics, and energy storage.
That mix may look scattered at first. It isn’t. Freight is where geopolitics, supply chains, and capacity discipline show up in the real economy. Photonics is one of the cleanest ways to trade the AI data-center bottleneck, because moving data with light instead of copper becomes more important as AI clusters get larger. Energy storage is no longer just an EV story; it’s increasingly tied to grid resilience, data centers, drones, aerospace, defense, and other high-power applications.
The common thread was physical capacity.
Not vibes. Not chatbots. Capacity.
Tuesday:
On Tuesday, we added trades tied to offshore infrastructure, optics, advanced manufacturing, and energy storage:
The offshore infrastructure angle fit the Gulf / postwar repair theme we’ve been tracking for weeks. If energy flows remain disrupted, and if the region eventually moves from war risk to repair and rerouting, offshore infrastructure sits in the middle of that transition.
We also added a space-launch supply-chain name. That theme keeps getting stronger as investors begin to look past the obvious public space tickers and toward the companies supplying the machines, materials, systems, and components that make the launch economy possible.
SpaceX’s hotley anticipated IPO keeps that theme in front of investors. The point isn’t that every space-adjacent name is automatically attractive. The point is that when a supplier name also passes our screens, the macro backdrop can help.
Wednesday:
Wednesday’s alert was more directly tied to the next AI supply chain:
The themes were silicon photonics, semiconductor manufacturing equipment, energy infrastructure, and automotive sensing / photonic chips.
This is where we think a lot of investors are still behind the curve. AI isn’t just model weights and GPU headlines. It’s testing equipment. It’s power. It’s interconnect. It’s optical networking. It’s semicap. It’s components. It’s sensing. It’s the physical industrial stack needed to turn compute demand into working systems.
That’s why we’ve kept coming back to photonics and power. They are not side stories anymore. They are part of the main story.
Thursday:
Thursday’s trades were here:
The first was tied to power generation and AI electricity demand. That was one of the clearest themes of the week.
Data centers need power now. Not in some abstract future. Now. Utilities, generators, backup power, grid equipment, interconnection, and related infrastructure are being repriced because the demand curve has changed.
That’s also why the broader power-utility consolidation chatter matters. If AI electricity demand is reshaping the power market, it makes sense that the industry starts reorganizing around scale, capital access, and the ability to serve hyperscale loads.
The other trades were in biotech and semiconductor test equipment tied to silicon photonics and AI infrastructure. Again, the link is capacity. Commercial biotech launches, clinical-stage catalysts, and AI infrastructure testing may seem unrelated, but the trades shared the same structure: defined-risk upside where the setup, theme, and pricing lined up.
Friday: Higher-Torque Names
Friday’s alert was different:
These were Multibaggers trades: higher-torque names from accounts on our Market Watchers X list with documented recent 100%+ winners.
The themes were neuro delivery, space, quantum technology, and genomics tools.
That isn’t a conservative basket. It wasn’t meant to be. The point was to use defined-risk structures to get uncapped upside exposure in names where the upside can be discontinuous.
The neuro-delivery name was tied to intracerebral / intraventricular delivery programs the market may not fully appreciate yet. The space name gave us another shot at public-space upside ahead of the SpaceX IPO window. The quantum name had the right theme and technical setup. The genomics-tools name gave us a biotech tools swing with defined downside.
That’s the kind of risk we prefer: asymmetric, structured, and sized.
The Exits
The other side of trading bottlenecks is taking exits when the options market gives them to us.
This week’s full Exits post is here:
There were 40 exits in total.
That was a lot because it was a big OpEx week. Options Expiration weeks are usually where our losing trades collect, because many of our winners are taken off before expiration when our preset exit orders trigger. On Friday, we had losing trades cash out from as far back as last September.
We had 22 winners and 18 losers overall. Of those 18 losses, 13 were partial losses rather than full losses. That matters. Cloudflare lost 30% of max risk. Enova lost 40%. Vnet lost 44%. Delcath lost only 4%. Robinhood’s May put spread from the March hybrid trade lost 9% of max risk.
The point of defined-risk structures is not to avoid losses. It’s to keep them bounded.
The Big Winner: Nebius
The standout exit was Nebius ( NBIS 0.00%↑).
That trade showed why structure matters. The put spread went fully wrong back in November, costing $5.00. But the call spread later exited at $16.28, turning the overall trade into a 4,412% winner on premium outlay and a 210% return on max risk.
That is the kind of trade that justifies taking repeated, defined-risk swings.
Not every trade will look like that. But when the upside side of a structure has enough convexity, it can more than offset damage on the financing side.
Other Ways The Structures Worked
Western Digital (WDC 0.00%↑) was a cleaner win: the call spread exited profitably, and the put spread was later bought back cheaply.
Freeport-McMoRan (FCX 0.00%↑) and Viavi Solutions (VIAV 0.00%↑) showed the value of hybrid structures, where the put spread and short call/calendar components helped finance the trade while the long call side ultimately delivered the profit.
Improving The Process
Credo Technology Group (CRDO 0.00%↑) is a useful process marker. That trade predated our current practice of applying RSI and Chartmill Setup screens not just avoid potential falling knives, but also to avoid potentially overextended names.
The point is to keep taking repeatable, high-quality swings while avoiding technically lower-quality setups.
A Constructive Week
This wasn’t an all-winners kind of week. OpEx weeks rarely are.
But it was a constructive week. We had more winners than losers. Most of the losing exits were only partial losses. The premium-harvesting legs continued doing their job. And the biggest winner of the week, Nebius, showed why it’s worth using structures that preserve enough upside for a trade to recover from early damage.
That’s the broader goal here: not to avoid every losing trade, but to keep losses contained, take profits when our preset exits trigger, and let the occasional big winner do enough work to more than justify the swings.
The Market Is Still Telling The Same Story
This week ended with a risk-off Friday. That happens.
But the market’s larger message is still intact: the world is short of capacity in the places that matter.
Short power. Short grid capacity. Short high-speed optical connectivity. Short energy routing flexibility. Short launch capacity. Short specialized manufacturing capacity. Short the infrastructure needed to connect the AI boom to the physical world.
That’s what we’re trading.
Not headlines in isolation. Bottlenecks.
Thanks for the debriefing. I love the warm, optimistic narrative of a productive future juxtaposed with the cold and calculating mechanics of your positioning; it's the most fun I've had in the markets in a very long time (whether or not there's ultimately profit).