With Yolo-ers on Spring Break, call options are getting cheaper. Some friends and I made a tool dankoptions.com to find the "Dankest" call options - those that are cheapest given a stock's historical price movement.

Here are 10 plays that are interesting. A thread 👇
1/ Given that AstraZeneca $AZN is in the news every day & key to global vaccination, the $60, Jan '22 Calls are interesting. Wall Street pegs the stock at $88 in 1 year well above July highs. Even at @ Cowen's $66 target, $AZN has a 180% IRR on the $1.00 calls.
2/ Energy Transfer $ET gave a $11B 2021 EBITDA guide for 2021 which means it's only 6.7x fwd EBITDA, 1/2 the market. It has a clean energy unit that's been around since 2012. If it trades to UBS rough target of $14 by Jan '22 you make 376% on Jan '22 $8 calls.
3/ Karyopharm $KPTI provided positive updates on its XPovio drug in February, and Morgan Stanley has a $32 target on the stock due to European Commission drug approval comments. If it gets to $27.5 by Jan '22, a $20 call pays off 360%
4/ Enterprise Product Partners $EPD is an energy play with long running excellent gross margins. Morgan Stanley has a $32 price target citing surprisingly bullish Permian outlook. If $EPD hits $30 by Jan '22, the $25 Calls pay out over 500%. Good inflation hedge
5/ Itau Unibanco $ITUB, Morgan Stanley sees running to $7.5 - citing 24 million digital customers, 58% net income growth and improving credit quality with explosive mortgage origination growth in Latam. If $ITUB runs to $7 by Jan '22, the $5.5 calls pay off 200%+
6/ Vistra $VST took a bit of a hit due to the Texas freeze, but should be a beneficiary of Biden's pledge for low carbon grid stability as outlined in February. MS has a $29 target on the stock and if it trades to $27 by Jan '22, the $20 calls more than double
7/ Cyberark $CYBR - a $5b company had a strong analyst day outlining a plan to hit $1B of ARR in Cybersecurity SAAS by 2025. Palantir has a $40B market cap and a $1.5B ARR run rate. MS sees the stock at $200. If $CYBR runs to $187 by Jan '22 the $155 calls more than double
8/ Palo Alto Networks $PANW is another best in class Cyber Security name. PWC's CEO survey showed Cyber as C Suite's top investment priority outside of Covid for 2021. MS sees the stock at $515 within 12 mos. If $PANW trades to $478 by Jan '22 the $420 calls pay out 100%+
9/ Amazon $AMZN has underperformed Google by 28%+ ytd but the street is underestimating its huge advantage from checkout history as it rolls out its DSP and OTT advertising offerings. MS sees the stock at $4200 and 3600 calls payout over 100% by Jan 2022 if it gets there
10/ What's a dank option list without an Electric Vehicle play? MS sees $FSR at $40 due to positive FoxConn traction pointing to potential collaboration with Apple on EVs. With a strong pullback, the $22.5 Jan 2022 FSR calls payout over 200% at $35 just north of ATH.
11/ I hope you've found this call option bouquet as dank as I have. In conclusion: 1] The options screener is here tinyurl.com/5yn3vpb9 2] E-Trade provides Morgan Stanley research for free 3] The decline of yolo-ers makes these plays more appealing but DYOR. Best of luck

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More from @goodalexander

29 Mar
I’m one of the few traders I know who has run corporate level ad spend.

trades and good advertisements have some interesting overlaps. A thread

1/ a good ad time boxes intent. “Pre order while supplies last”. A good trade also typically has an end date in mind.
2/ good ads have multiple ways to win.

Carousels that add to email list, phone number extensions, additional models listed on a text ad, options for live chat. Good trades can beat earnings, get acquired, gamma squeeze, get upgraded
3/ varying level of detail based on thesis. Ogilvy famously noted the power of long form ads for expensive products. Similarly a long term bet on an expensive stock is best served with extensive detail.

Ads and trades work best when thesis, scope & timeframe are aligned
Read 10 tweets
26 Mar
I got on Fintwit to study data around my own trade ideas, but get so many requests about resources to learn how to trade, & don't have time to answer them.

I've assembled a crash course for novices. A thread 👇

1/ First, culture and lingo. amazon.com/Liars-Poker-No…
2/ Second, industry history. What is a hedge fund? This is important to understand the economic model & intention of actors in the game. amazon.com/More-Money-Tha…
3/ Understanding M&A and corporate intrigue -- this is important to understand adversarial nature of markets
.
amazon.com/Barbarians-Gat…
Read 24 tweets
20 Mar
Have seen some young traders have very unrealistic expectations about their returns. A thread to knowing how much edge you realistically need to trade full time.

1/ Here's the expectancy of 1,000 traders with no edge trading leveraged instruments (stocks, gold, oil). Why so bad?
2/ A] Leverage has embedded interest expense. B] Look at a chart of Citigroup. When it dropped 90% needs to go up 10x to get to where it was. C] Volatile securities - including options, are expensive to trade. Even with free trading you pay "bid offer" - buying high selling low
3/ One of the 1000 traders in the example above 27x-ed his money over 10 years. Chances are he's on Twitter talking about his process, "mentoring you". This is the idea explored in the book "A Random Walk Down Wall Street". The median trader ends down 80% in this example
Read 10 tweets
16 Mar
A quick thread on how I approach quant drawdowns as it's likely under-discussed.

1/ The "memepocalypse" hit on Feb 23, causing me to lose 3.5x my acceptable limit. The loss happened to be overnight. I always start with the question, "What should I have known?" The answer:
2/ I should have known that BB, AMC, and NOK, and the ARK complex were realizing *new* correlations distinct from the overall market such that their unwinds would realistically not occur with the market or even inverse it due to using things like QQQ as funding trades.
3/ Asset market bubbles have a long history of driving abrupt inverse correlation. During the 1999 tech bubble value stocks, telecoms, staples and utilities were shorted to "fund" technology longs. "Isolate yourself from the beta but enjoy the ascendancy of tech". Ended in tears
Read 12 tweets
13 Mar
People seem to enjoy threads about learning to trade. A thread about my journey and advice for my past self 👇

1/ In 2010 I realized credit default swaps anticipated dividend cuts and other bad things likely due to being OTC & less regulated. By 2013, I quit my job to trade it.
2/ The strategy was short only. (older traders are now groaning). After 8 months or so of live track record, I raised money from an older peer who could get me the data cheaply. I quit my job. I secured & turned down an offer at a credit trading desk which added a bit of FOMO
3/ When I raised money I guided very low drawdowns due to the backtest (lol), high returns and strongly negative beta. (older traders have now left the chat). This seems laughably naive but honestly I don't think I'd have been able to raise money if I didn't overpromise.
Read 15 tweets
7 Mar
Markets are shifting. Narrative stocks are getting killed relative to valuation plays. I made this poll to discuss valuing companies. A thread 👇

1/ The Twitter consensus for this hypothetical business is 21.4x Earnings. To quote Elon, the price is too high imo. Why?
2/ Takeout Premium. The firm is likely private. Bain and Deloitte stats for a PE takeout in Consumer & Software are ~12.5x EBITDA for this growth. Back of envelope given industry cap structures, about 21x EPS. If you pay the exit multiple up front, you have no upside.
3/ Liquidity Premium. Because the firm is private, you can't sell if things get bad. You're paying above Clorox and P&G's multiple for this random biz. And if things go south you could lose 50%+ trying to liquidate vs only gaining 10% for avg IPO multiple. Bad risk reward.
Read 8 tweets

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