Stop-In Summer

Between the Lines - Vol. 9

It’s been a couple of weeks since I last wrote. I went away for a short amount of time and just fancied a break from writing. As I have always made clear, I am not in the content creation game. If nothing has changed since my last post, it doesn’t make sense for me to write the same thing in different words, but here we are.

Let me show you the scoreboard first, because it buys me the right to say the uncomfortable thing that comes after it.

The SNOW 180 Jun calls I shared with subscribers before earnings at 6.9 (and allocated 70bps of NAV) last traded at 100.7, I am still carrying a quarter of the original size.

The Phase 3 basket (20% weight) has gone from +12.6% when I last wrote to +35% since I shared the basket in late March, doing exactly what I said it would.

From the last time I wrote, my top weights have done the following…

ORCL (10% weight) 186 to 248. CRDO (5% weight) 156 to 223. I also bought some 170 weekly calls in the dip at 3.5, which settled at 48.33… I took the delivery and sold the delivered stock shortly afterwards. Last night, it reported earnings and knee-jerked 15% down, as I type this, it’s barely down one. Bottleneck is doing what bottlenecks do.

MSFT (7% weight) 416 to 460, with the short 380p I am carrying against it quietly melting into irrelevance.

CRWV was put on ten days ago at 5% weight at 107, now trades at 125.

TEAM put on last quarter at 5% weight was 85 the last time I wrote, now 116.

NOW also put on last quarter at 5% weight was 99 the last time I wrote, now trades at 135.

The 70/90 Jun IGV risk reversal I put on for a credit is now 17 dollars ITM on the call strike.

The list genuinely goes on. Some may say I am victory lapping, maybe I am, but it’s been an incredible quarter, and now we enter the final month of it. I can’t sit here and act like you get many markets like this; you don’t. But when you do, the correct response is not false modesty, but to ask why it happened, whether it can continue, and what the market is about to bid next.

Dispersion has once again proved itself to be the most profitable condition of the spring. The software melt-up every desk has spent the past week trying to explain (IGV up double digits in a few sessions) is the same Phase 3 idea I wrote back in late March. Thus far, the software bid has been nothing but a cover bid. The AI-replacement bear case got way too loud. And so many of these names were too cheap versus their own cash generation.

Now, before you assume this post is going to be me finally climbing into the bear suit, it’s the opposite. The honest and repeatedly back-tested conclusion is that being stretched has not been a tradeable sell at all in this market, and the most likely surprise from here is a further melt-up driving a huge stop-in. So yes, I continue to look up and to the right.

So in this post, I'll share some fresh high-conviction trade ideas and where I think this market is heading next.