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?

  • 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…

Holding Zone

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……..

Amazon, Gold, and the Charts

October 17, 2020

Today, for fun, let’s review the charts. Let’s start with a stock we don’t regularly follow here: Amazon.  The one month chart is interesting. Interesting in that on Friday, at 10:30 in the morning, AMZN was trading at $3,399.66, but couldn’t quite make it to the psychologically interesting but otherwise unimportant level of $3,400. At […]

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Time to Deploy Capital in Gold?

October 10, 2020

Last week I said Keep Your Powder Dry.  I also said this: I assume that by Canadian Thanksgiving he will be back in the White House, on the road to recovery, and he will be able to say “this was serious, I should have been more careful, but even for a 74 year old obese […]

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Keep Your Powder Dry

October 3, 2020

I have no idea what it means to “keep your powder dry”.  Gun powder, I assume, because if it’s wet it won’t ignite?  Baby powder, because there’s no point in putting wet powder on a baby?  Two different images, same implications. My operating thesis is this: Trump wins the election in November, probably by a […]

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Where are we at?

September 26, 2020

I have no idea where we are at. I know that the price of gold is about where it was back in July, around $1,862 an ounce, which is a lot lower than the $2,000 at ounce we exceeded on August 6.  It’s been all down hill since then. Why? I have no idea. Profit […]

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Where are we, exactly?

September 19, 2020

As on write this on Saturday September 19, we are 46 days away from the US presidential election.  What happens between now and then? Historically, markets favor the incumbent, because they like certainty.  The S&P 500 returns, on average 15.44% in the year after the election if the incumbent is re-elected, as compared to 5.71% […]

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Covered Writes were Right This Week

September 12, 2020

Sorry for the stupid pun, but the covered write call option strategy worked well this week. After the recent correction, I believe gold stocks will trend higher, so I have a position in NUGT – Direxion Daily Gold Miners Bull 2x Shares because I like crazy leverage.  NUGT gives me that.  I expect to hold […]

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Volatility

September 5, 2020

The word of the year is not COVID, it’s volatility.  I’m not going to even bother putting up the charts, because you know what they look like. Apple, Tesla, whatever, they are highly volatile.  I discussed Apple last week, and the trade worked fine, cashed in and went to cash before the long weekend.  My […]

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Stock Split Craziness

August 29, 2020

I said last week that I would get back to a discussion of gold this week, but I won’t, other than to say gold is doing fine, building a solid base above $1,920, which presumably will propel it on its next run well above $2,000.  I have my position, I may add on pullbacks, but […]

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