by JDH on October 31, 2020
As I described last week, I expect Trump to win the election on November 3. I don’t expect it to be close. I expect that by the morning of November 4 it will be an obvious landslide victory, regardless of how many mail in ballots have yet to be counted. The average American thinks they are better off now than four years ago (or at least they were before the Big Bad Virus, and they don’t blame Trump for that), and just like in 2016 the pollsters will be spectacularly wrong.
310 Electoral College votes. That’s my prediction.
So how does one profit from such an outcome?
I have done the following:
Purchased shares of XOM – Exxon Mobile Corp – paid $32.46. These are the only shares I’ve purchased. I’m gambling everything else on options. Why shares of Exxon?
- they are beaten down; they can’t go much lower, so this is a low risk play
- it pays a 10% dividend, so even if I’m stuck with them they have a yield
- Trump is pro fuel, Biden says he will eliminate fossil fuels, so if the market expects Biden to win, a Trump victory should cause a big bounce in old energy stocks
Purchased calls, JPM – JP Morgan, expiring November 13, $100 strike price, for $2.21
- Republicans are unlikely to impose any additional restrictions on the banks;
- Trump is unlikely to raise taxes on the banks
- The new Congress will pass a big stimulus package, which always helps the banks
- So, buy the big US bank and sit back
Purchased calls, SPY, expiring November 13, $350 strike, for 69 cents
- this is a simple bet on a market bounce
- I’m going with November 13 options to give them an extra week; a more risky play would be the November 6 expiry date, but the November 13 expiry prevents a more rapid decay of the time premium
Purchased calls, QQQ, expiring November 13, $280 strike, for $5.63 cents
- this is a bet on the tech sector; a high risk bet
- but, for some risk containment, I sold the $285 strike to cover half of the position for $2.68, so that caps the upside buy mitigates some of the potential loss.
I’ve lightened my exposure to gold, but still have significant holdings (on the assumption that gold may take a temporary hit).
Check back next week for a good laugh if I am totally wrong…
by JDH on October 24, 2020
I have nothing to report this week, because nothing happened this week. Perhaps next week will be more eventful.
There was a presidential debate, which I didn’t watch, but based on the reaction I read on Twitter, which I assume is completely accurate, President Trump will win an easy re-election. My prediction:
310 electoral college votes.
Landslide win.
Why?
Why would anyone vote for a bully?
Because, if I am “Joe Lunchbucket”, he’s my bully. He’s fighting for my job. He’s fighting against China. He’s on my side, or at least that’s how I perceive it. Reality doesn’t matter, only perception, and the perception is he’s on my side.
Also, despite the Big Bad Virus, Americans feel they are better off than they were four years ago. They don’t feel that the country is better off. The country is a mess. Riots. Problems. But they themselves are better off, and that’s what matters, so they will vote for Trump.
How will his landslide win impact our investments? I don’t know. I’m pondering that.
I assume the stock market will be happy, and we will have a big rally, so if you want to gamble, by some call options and watch the fireworks.
We’ll know in two weeks……..
How to Bet on a Trump Win
by JDH on October 31, 2020
As I described last week, I expect Trump to win the election on November 3. I don’t expect it to be close. I expect that by the morning of November 4 it will be an obvious landslide victory, regardless of how many mail in ballots have yet to be counted. The average American thinks they are better off now than four years ago (or at least they were before the Big Bad Virus, and they don’t blame Trump for that), and just like in 2016 the pollsters will be spectacularly wrong.
310 Electoral College votes. That’s my prediction.
So how does one profit from such an outcome?
I have done the following:
Purchased shares of XOM – Exxon Mobile Corp – paid $32.46. These are the only shares I’ve purchased. I’m gambling everything else on options. Why shares of Exxon?
Purchased calls, JPM – JP Morgan, expiring November 13, $100 strike price, for $2.21
Purchased calls, SPY, expiring November 13, $350 strike, for 69 cents
Purchased calls, QQQ, expiring November 13, $280 strike, for $5.63 cents
I’ve lightened my exposure to gold, but still have significant holdings (on the assumption that gold may take a temporary hit).
Check back next week for a good laugh if I am totally wrong…