Alright, guys, sorry for the delay, but I had to get some things out of my way today before dedicating 99% of my focus to writing about what I'm thinking of doing next. Sorry, but 1% of my brain will always be focused on the watchlist I constantly keep in a corner of my screen - one of those bad habits you pick up when you spend too much time on a bank trading floor, even when you have nothing in particular to care about in a specific moment.
In case anyone missed the updates I shared right away in the community chats, I sold all my PR call option position yesterday and rounded up my sugar futures position to 50 contracts. Did I sell PR because I don’t believe in the company anymore? Of course not. I smoke a lot, but I never did drugs, so don’t expect hallucinating behavior from me. As a matter of fact, I handled my PR position exactly in the way I anticipated everyone on Sunday (here), word for word. Here is the rationale I shared ex post in chat:
“PR Oct16 calls expire in 48 hours, and the upward momentum was curtailed by the CPI print and Indexes starting to puke because of tech stocks. I know things can turn around on a dime, but the 25$ gamma wall is big; it will increase the closer we get to expiration, hence the harder to break. While a pullback to 23$ strike in this market is just within the daily vol. So, all in all, I made my risk/reward considerations and preferred not to lose money vs. losing potentially everything for a limited upside unless something extreme happens by Friday in the energy space. But Friday is also OPEX, and you can be assured they will do all they can to keep Vol as low as possible across the board to avoid a mess in the derivatives market.”
My decision had nothing to do with PR; that remains a stock pornographically undervalued. The reason why it remains on top of my mind, but here is the thing about myself: I PUT ALL ALTERNATIVES ON A TABLE EVERY TIME, AND THEN I PICK THE ONES WITH THE MOST COMPELLING RISK / REWARD EVERY SINGLE TIME BASED ON MY INVESTMENT PROFILE, APPROACH AND GOALS.
NEVER GET MARRIED TO A TRADE OR A STOCK; THAT ITSELF ISN’T A BAD THING IF YOU ARE ON A GOOD TRADE (HORRIBLE IF YOU ARE IN A BAD TRADE), BUT THE SURE BAD THING IS THAT IT CAN MAKE YOUR VISION TUNNELED.
There are always opportunities in the market; the best approach is always to keep an open mind about everything, which surely is something with little downsides.
Now, here are the opportunities on top of my mental table:
- PR: great name, next earnings due on the 4th of November. The average crude oil price the company monetized in Q3 will likely be lower; however, that’s not what matters. What matters are the expectations that crude oil prices will remain elevated, and a great gauge for that is Dec2027 CL futures. The chart talks for itself, and I do not need to say anything more I think.
- Crude Oil (Futures / USO / BNO): I shared this chart in the Markets chat and, on top of what we discussed this week so far about the market being stretched, swap spreads widening, and spot prices refusing to ease, I am watching this super closely. My target is 96$ strike Nov CL options (post-US midterms, and with a huge OI signaling the market consensus is for anything big to happen in the market only after the midterms). If the current short-term diagonal support holds till we get very close to breaking the dotted threshold right underneath 96$, I might place a trade very soon. If that support breaks, I believe the price can be pushed all the way down to the multi-month diagonal ascending support in yellow, and once we touch that, it will be my entry point UNLESS something material happens (like a particularly good fake news or concentrated and intense manipulation that ends up breaking the setup). To be honest, I am not excluding a small 1DTE / 0DTE trade if things get toast in the next 48 hours. However, with OPEX for both stocks and CL options so close, you can trust market makers to do their best, as usual, to suppress volatility and protect their books.
- Sugar: I feel incredibly bullish on this trade in the same way I was feeling about Silver last November, just sharing my honest thoughts here. However, I am restraining myself from going YOLO because you never know in this freaking market, and better to always keep some diversification. Furthermore, I want to keep some of my personal short-dated allocation for options in case I stumble into anything better.
- Copper: The more I look into copper, the more I see a compelling opportunity to overcome my PTSD and short the stupid AI bubble, especially when it feels like, at last, the dominoes started falling rather than just wobbling (CharacterAI chapter11, Firmus IPO bust, rising heat on Coreweave debt, and so on). My problem here is that hyperscalers will remain resilient for a bit longer, and they have no alternative but to keep throwing good money after bad money already sunk into the large buildout of data centers. So the narrative and sentiment support copper, not the numbers, because those still show supply much greater than demand, and that might also remain in place a little longer. As you can see in the chart, the correlation between Copper and QQQ became nearly 1, however, I believe that copper will crash much harder than QQQ, as it did already in the past once demand and hype evaporated.
- While TTF will likely continue rising into Europe’s winter, considering the weather in Europe and what I shared in my latest update on Natural gas, I believe Cheniere / LNG trade will be more of an early 2027 one onwards, when Europe will be FORCED to restock Natural Gas hard because at that time the inventories will be very depleted.
- The same applies to CF Industries and the fertilizer trade. Although I believe that even next year the chances of a shortage of grains might not materialize unless the weather is very bad and we have big disruptions in Ukraine/Russia. Furthermore, Trump already said he is discussing cutting a deal with Belarus to buy fertilizer; eventually, I do not see what can stop him from cutting a deal with Russia (and why not Ukraine) to buy their corn and wheat.
- Gold and Silver are constantly on top of my mind, but for the reasons you know already, I believe we are still nowhere close to the short-term pain for both metals.
- With regard to stocks in general, I do prefer to wait for the whole crash first, no matter how long it takes, especially in the US, and then GO LONG as if there is no tomorrow, when it will be clear people will be so burnt and mentally shattered that they don’t want to hear anymore about stocks (till the next bubble, of course). That will be the perfect entry for deep value investing and leaps, not for short-term trades. Here is my gut feeling: even if the AI Bubble bursts miserably, the huge financial crisis that will follow is going to take more years to materialize. There will be a bull market between the two, likely strong considering all the liquidity relentlessly printed into the system and sloshing around, but we will have to keep our eyes open and pull out when things resume wobbling again.
- Crypto is not dead; it’s in a coma. Not the first time either, and every time it wakes up, the stupidity somehow becomes even bigger, and I do not think the space will suddenly wise up. Let me be clear: BITCOIN IS NOT CRYPTO ANYMORE. Bitcoin is now a macro asset present in the portfolios of major asset managers and especially PWM / HNWI around the globe. Based on my extensive experience here, there will be 2 types of opportunities. Tokens currently at the rock bottom that will pull off stupid 10x, 100x, or even 1000x runs, and new projects launching tokens that will start from the bottom and rise to the top (most of them will crash back to the ground, of course, but still). I personally consider crypto tokens like options without expiration, and even if you cannot put a fundamental value to them in the same way you cannot do it with Bitcoin, what I use to find the needle in the barn is strong teams without a past as scammers with a track record of rug pulls, their ability to raise capital outside crypto as a bedrock to jumpstart (so they do not need to dump tokens they issue out of thin air to pay their bills), and effective marketing / popular support that can burst into irrational FOMO. LUSH, CPOOL, AINTI (pending relaunch), and McPepe are tokens I still hold in large sizes. Not because I spent a lot of money, but because I bought them at very low prices. I ONLY BUY CRYPTO ON DEXES AND OWN THEM DIRECTLY; I do not deal with exchanges (since I know for a fact most of them have negative capital and finance themselves with clients’ assets). Crypto is still a shitty and complicated minefield; the reason why I suggest anyone unwilling to go down the rabbit hole and learn how to handle keys, wallets, on/off ramps, and so on is to just ignore this last point today.
Bottom line, I have plenty of ideas floating in my head, but having an idea and putting money behind it are two very different things. Sugar remains my strongest conviction, crude is getting very interesting, PR remains very interesting (alongside XLE, VLO and CRAK, not OXY that disappointed me quite a bit), and everything else needs either better timing or a better price. NO NEED TO FORCE A DAMN THING. This market will keep serving opportunities alongside traps, and my goal is not to catch every move or win every argument. It is to pick the risk/reward that works for me personally, protect my capital, and stay flexible.