27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.
On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.
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For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.
IPOs aren't usually discussed on our show for one primary reason. Since a good portion of our show is going over technical setups, it's difficult to do that with little or no price action for a new issue.
However, Thursday's IPO of Rocket Companies (NYSE:RKT) is near and dear to the heart of Benzinga as our headquarters reside in the same building in downtown Detroit.
What They Do: Rocket Companies is the parent company of Quicken Loans, the nation's largest home mortgage lender. In addition to the mortgage business, it has expanded into complementary industries, such as real estate, personal lending and auto sales.
Blast Off On First Day Of Trading: Aided by the aggressive Robinhood contingency, as well as investors and institutions looking for long-term gains, traders piled into the issue. One of those investors was Jason Rasnick, the CEO and founder of Benzinga, who was one of those investors that pounced on the issue right off the open and went long at $18.
He explained what his thought process was:
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Wall Street Prices It Right For Early Investors: Sometimes underwriters get it right and sometimes they get it wrong.
When priced too low and the price constantly needs to be adjusted before the opening print, it often creates a buying frenzy that pushes the issue to extreme and sometimes unsustainable levels. When priced too high, such as the IPO of Lyft (NASDAQ:LYFT), the public gets smoked.
In the case of Rocket Companies, it opened exactly where the Street priced it at $18. After a brief dip to $17.50, it rallied to $22.76 and retreated to close at $21.51 on a good volume of 111 million shares.
To The Moon, Alice, To The Moon! Investors that missed out on the early bargain weren't going to miss out in Friday’s session. In fact, some traders didn't want to wait until the open and aggressively purchased shares in the after-hours session, driving it to $23.25 by end of that session on significant volume.
It continued higher in pre-market trading, going as high as $25.40. It opened the regular session just below that at $24.75 and didn't run out of buyers until it reached $26.85 three minutes into the session. As of 11:30 a.m. ET, it has fallen back to the $24 area and will likely surpass Thursday’s healthy volume.
Moving Forward: From a fundamental standpoint, Raznick believes people “do not understand the company, not only do they do 100,000 mortgages per quarter, they are a fintech software company.”
"They built an automation process to do very difficult things, through acquisitions they are going to own the finance space, where they will be the financial place to go to make any kind of purchase," Raznick said.
With only a day and a half of price action, there's not much price action to analyze. However, based on its already $9.35 range, a 50% retreat to the $22 area may attract the “buy the dippers” who didn't want to chase the issue in early trading. For those looking to trade the issue on a shorter-term basis, its current all-time high ($26.85) could be a potential target on the long side.
As always, monitoring its daily closing price and its all-time closing high price will provide clues to its next move.
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.