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Posted by4 months ago
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Posted by11 months ago

Sup Ape fam,

Before Monday opens I just want to do an After Action report in the wake of the Jan 7th Pearl Harbour attack we just sustained. Some peeps tagged me asking to do a follow-up of my last sus-themed DD since Friday’s IV pump-n-dump + basket cover played out much as we expected.

While +7.32% is by no means a Bad Day, it wasn’t the start of MOASS we were teased with when the AH price action started ripping over 30%. .\/.

In hindsight it is now clear that the WSJ was a FUD bomb, targeted to steal RC’s Thunder of an impending NFT marketplace launch. The barrage of ham-fisted MSM articles the day after deriding the NFT Marketplace was more confirmation this was a straight-up hit job.

But at what cost?

So, was it worth it?

I’m going to take the unpopular opinion side of this here and say that RC was wide open for this torpedo attack. All the Loopring tweets, the job postings, the SMRT comments, dropping hints for weeks on end was like letting a wet dog loose in the house. They could have put Loop under a tighter NDA. No tweets. They could have used a third party instead of hiring through their main website. They could have done a lot more to keep their secret weapon under wraps until it was ready to launch. They could have put their GitHub code in a private repo. And they absolutely should never have expected the MSM or SHFs to play fair. Unless the whole NFT thing is actually bait, RC 5D Chess, this has lost much of its impact when it does eventually get announced.

Fortunately, pre-empting the NFT announcement will do nothing to impair it’s actual long-term financial impact, we can still expect GME to add another billion or two to it’s annual revenue over the next year and this means the long-term value of the stock will eventually be multiples of the current share price. All we’ve lost Friday was a catalyst for an early MOASS. So, the only ones who are gonna be salty here is those peeps with options that expire soon. The MOASS is inevitable.

Now I need to revisit one thing from my last article. Since we know Jan 7th was 100% coordinated, I need to mention the content of the options posts we saw them allow onto the sub that-shall-not-be-named. They allowed those posts, that content, possibly bc they are comfortable with the yolo plays it suggests. Jan 21 and Feb 18th $200 Call YOLOs. Go look for yourself. I was holding some of those, now I’m thinking about moving my options out further and to much lower strikes. On expiration day one ITM option is worth more than a hundred OTM and I don’t think I like their “suggested” yolo plays.

I truly don’t want to step on the turd that is this sub’s pro/anti-options debate. Fact is the last few months Retail has been a premium piñata, short-dated OTMs wiped out on the weekly. In my opinion, the options debate is dumb. Options aren’t bad, losing money is bad. If you can’t get your options to print, every $140 DRS’d share is a guaranteed winning lotto ticket, and you can’t go wrong with that.

We don’t know if the MM’s are actually Delta-hedging our calls, the GEX we often see Tuesdays, post-expiry suggests they aren’t. Even if calls aren’t creating pressure, our DRS’d shares are creating massive piles of FTD’s cause we see them coming in huge waves from Jan 10th to Jan 21st and beyond. Waves and waves of FTD’s.

Nuff’ said. Now, let’s talk about what that little torpedo attack cost the MM/SHF’s bc it did in fact come at a steep price.

This table make hedgies cry

The Options FOMO

Here is a comparison of the Option Chain for GME on Jan 6th vs Jan 7th. Please get a coffee, sit and stare at for five minutes until you see a picture of a pirate ship emerge.

Friday morning we saw several million bucks fomo into GME at the worst possible time, Implied Volatility was spiking hard making those options super expensive. Just minutes after open them pulled the rug and an absolute crap ton of premium got wiped out in mere minutes as the IV got crushed and all the 0-DTE boys got absolutely fleeced.

Some of us saw it coming if you read my prev DD, but it isn't all bad news bears.

But, 1,889 put contracts were opened on Jan 7th. 4,558 put contracts expired ITM, so have fun with that on T+2 boys. Over 16,000 expired OTM at an average strike of $120 so these were truly some multi-million dollar put walls that got absolutely smashed.

At the end of the Day Friday, we had 2,401 more contracts expire in the money than Jan 6. On Jan 11/12 we can expect 240,000 shares in buy pressure as Gamma exposure comes back to bite any MM’s who were not appropriately Delta hedging these. We have good reason to believe practically no Call options are being Delta hedged, since their latest ploy appears to be smashing the price action down to drive them all OTM instead of hedging.

Also, there are now an additional 5,668 Call Options are now in the money, representing an additional 566,800 shares of buy pressure for future expiry dates and half of them are Jan 21st strikes, making Jan 25/26 another huge Gamma exposure day for any MM’s who were not appropriately Delta hedging yesterday. I wish there were more peeps loading up $140 strikes instead of $950’s, but more danger noodles is more danger noodles.

I gotta wonder, did the MMs/SHFs expect this much raw FOMO to hit them in a single day? Even with the IV crush it’s a MASSIVE amount of capital that came flooding in. Over 8,000 more Calls are now ITM!!

Vindication of Cycle Theory

Despite the WSJ FUD on the evening of Jan 6th, what happened Jan 7th was in fact powerful confirmation of Cycle Theory in that we saw huge buy pressure and volume at the T+2/3+6+35c days from Nov 19th, the date we were expecting GME Swaps to roll, expire or fail. They failed and we just witnessed the ‘anomaly’ that occurs in this case and it is very good we finally saw them manifest. More interesting is that this shake out was on the Market Maker T+9+35c ETF FTD schedule. We now know the MM’s are carrying the bags for the SHF’s in an act of blatant collusion.

How big are the Swaps?

Back on Aug 24+25th we saw volumes of 27.4M. There was 7.3M volume on Nov 19+22, so with and additional 18M vol Jan 6+7th, we now have seen a pretty good indication of how big these suckers are. The swaps have not been closed or covered, otherwise we would have seen a green candle the likes of which mankind has never before witnessed. We only saw them rolling. The swaps are some fraction of that 25.3M volume, bc not all the volume on those days would have been a Swap share getting rolled. How could we determine what the fraction is though? Tricky.

So, the 25M got rolled yesterday and we can expect another high-volume day or two on the order of 25M in volume in the future.

When will Swap day return?

According to Cycle Theory we had originally expected Swap day on Nov 18th, like we saw Aug 24th, May 25th and other previous dates. But for those of us waiting on the 19th, options at the ready, it simply didn’t happen. We watched for days wondering if there were extensions, our dates were wrong or something. The roll or expiration of the Swaps is predicated on a counter-party picking up that CME Future and it is entirely possible there no nobody crazy enough to pick up the other side of a 25M GME short position. Duh. The Volatility Swaps are a Citadel/Virtu product, so those likely still exist so long as the options chain suggests a replicating basket exists there to back the swaps.

There wasn’t much covering Friday, 7.32% gain on 12M volume, just a lot of rolling.

It’s not XRT, that’s for sure.

Friday was T+13 for the NYSE Thresholding of XRT. The volume on Friday was a muted 2.7M in XRT. Short volume on XRT was still persistently high at 56%. Not sure what’s up with that, so we will need to look at the FTDs on XRT for Jan 7th when they are available on Jan31st to see wtf is going on there.

We DID see huge short volume on XRT for Jan 4,5 and 6th. This appears to be the ‘last gasp’ where they abused it as much as possible before T+13 ends the abuse, and looking at the chart, GME got absolutely pummelled on the 4th, 5th and 6th. Expect some positive price action 13 days from the 4th, 5th and 6th. Will be looking at the FTD’s for these dates also in the next report, expect they will be quite substantial. Coming back in T+13. Thank you Reg Sho!!

This may be the end of cycle theory, as we have known it. All the shorts that were rolled will be back, we just don’t know when. What did they roll them into? T+2/3? Spread across other ETF’s would see them return T+9+35c but I haven’t found which ETF’s they are using instead of XRT yet. Will keep looking …

Disregarding the Jan 7th expiry date, 11,452 new Put options have been opened. Most of them for Jan 21st. The MM’s/SHF’s are gearing up for a close quarters battle over the next two weeks. Using Put options like this is a very, very expensive way to suppress the price of a stock bc puts expire. This is more desperation.

Friday we got a drop of blood

option? get it? hah

Something that deserves more attention is the 2M real shares that got borrowed for GME Friday. The SI spiked a massive 20% taking us up to 59% utilization. Using actual GME shares is anathema for SHFs. The last thing they want is articles pointing out how GME is once again rising back up to the 226% SI we had a year ago, triggering fomo en masse.

I haven’t seen many ppl talk about this, but in my opinion this is HUGE news.

Hmm. Smells like desperation or dirty socks.

Where did they hide the shorts this time???

A bunch ~5M probably got hidden in ETF FTDs in XRT the final day or two before the T+13 Threshold limit, so we can expect those to be back in either T+13 if they are following Reg Sho or T+35 if they claim the ETF unwinding.

The rest, I don’t know actually. I’ve scanned the other ETFs with GME in them and I don’t see any unusual vol activity. Of course, we won’t know until we finally get to see the Jan 6/7 FTD data on those ETFs which we won’t get until Feb 15th.

Could be straight up naked shorts that FTD in T+2(+1), possible but I can’t believe they are desperate enough they would orchestrate that WSJ article as cover just to buy an extra couple of days.

Answer: No idea where they are hiding shorts and FTD’s now.

XRT remains on the Threshold Securities list as of Jan 7th

Good news, we’ve seen no effort thus far to clear the XRT FTD’s for five days and get it off the list. Again, on Jan 15th we’re gonna get the FTDs list for Dec. 16-31st to see how much XRT got abused. Then the Feb 15th drop will show the final days of FTD’s just before it hit the T+13 limit.

Endgame Finally?

We’ve got a ton of FTD’s from Jan 10th to Jan 21st, a big slug of ETF FTD’s on the 13th and another one on the 21st. Friday’s swap FTD volume will return sometime, maybe T+9+35c. Jan 4th ,5th and 6th last gasp of XRT coming back on Jan 26, 27, 28th. There may be a real NFT announcement some day, maybe the 25th which is Etisoppo Yad! Keep an eye on GME borrows, if SI keeps rising over the next two weeks, this is truly the endgame.

With some much stuff about to hit, I think we're gonna have a great week apes, be good to each other. :)

TLDR: Hedgies r fuk themselves.

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Posted by10 months ago
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Posted by6 months ago

I spent the last days trying to figure out the next play on retail stores earnings that are coming next week.

On May 26th before Market Open we have $DG (Dollar General) earnings and after market close we have $COST (Costco) earnings.

After seeing WMT and TGT drop nearly 20% and almost 30% respectively, we can see that other retail stores of the same vein dropped as well. Their prices are getting priced in.

WMT -30.53 (-20.39%) past 5 days

TGT -64.75 (-29.42%) past 5 days

DG -45.88 (-19.65%) past 5 days

COST -79.71 (-16.07%) past 5 days

BJ -11.10 (-17.51%) past 5 days

Looking at Puts vs Calls on DG and COSTCO (ONLY USING 3rd June options here to fight off theta, the results are much better than 27th May) assuming a return to the mean IV right after earnings we get some interesting results (most extreme negative case)

$COST same ratio put vs call, assuming -40% IV decrease and 10% price change, profits in $$$ amount

June 3rd $COST

Now $DG :

June 3rd $DG

As you can see, the leverage provided by Calls in both cases is better, their prices are lower for one, and they cash in more profits, even with major vega decay of -40% to -50%.

The IV on Costco is a little bit less too, so even though they're more expensive, they seem a little more attractive, also the fact that Costco business model relies more on membership, even providing reduced gas prices at their pump, and the bulk model might be more attractive to new customers now.

Now why bullish on these instead of bearish for earnings?

Well, first when WMT reported earnings first, it dropped considerably, then TGT reported earnings before market open on May 18, and dropped 25% or so pre-market. I bought a put for like 175$ and made 2400$ on it lol.

THEN BJ Wholesale reported earnings on May 19th before market open the day after Target, and saw a price surge to the upside, from a low of 53$ to a high of 60$, which is a 13.2% increase. Now I assume that COST and DG or other retailers of the same style are due for a price surge following earnings. Right now these stocks seem like they needed a correction yes, but they seem undervalued to the long-term, which might spike in bigger players to buy on the dip, waiting for good guidance.

BJ Wholesale earnings play

Looking at $DG average returns over year, it sits at 22% or so. They also announced at the end of 2017 that they would open 900 new stores in 2018, which explains the sudden shift in trend seen from 2018 onwards as can be seen here on those charts :

Zoomed in


As you can see the current price just corrected down to the "normal" channel, but the actual average growth of COSTCO is the blue trend. Analysts even price COSTCO MUCH MUCH higher in average like 580$

Here comparing EV/EBIDTA and PE ratio to competitors for some more direct info :

This is very much a counter-trend 1-3 days play.

You HAVE to sell your calls after earnings and check charts waiting for some kind of high of 10% or more to sell your options. I expect some shorts covering, went they assumed that the downtrend on big retailers would keep going down.

I feel like COSTCO is the safest play and the most undervalued, their business model isn't as related to WMT and Target, using more of bulk items + membership premiums as revenue rather than price differences between buys and sells.

$DG is cheaper and also had a 3% harsher correction

A more interesting play could be much higher expiration calls aswell.

I intend to wait to see how the market settles on Monday or after FOMC and buy COST $460 Calls for June 3rd and maybe some $DG 205 or 210 Calls for June 3rd.

Need some more input from you guys, something I'm missing maybe.