2 million in 23 minutes using only insider information! (not us we wish)

Good morning RIGD.

Let us begin with an ancient chinese proverb

In calm watchfulness,
Better no good alerts than
False alarms that deceive.

Which is exactly what happened yesterday.

Total option volume of 37.0m contracts was 11% below recent average levels, with calls leading puts 6 to 5.

It makes sense given two of the magnificent seven ($GOOG and $MSFT) reported after the close and tomorrow Jerome Powell speaks.

Today should bring fireworks.

If you find yourself as one of the few the proud the degenerate members of the closed beta, we must remind you that JPOW days are like MFF (max fuckery friday aka monthly OpEx) where we don’t have enough data and haven’t tweaked anything. Expect to see a ton of alerts. Use the power of florbs and flore to guide your decisions. Don’t listen to listen to 27BigMoneyHustlin1988 in the chat he was born in the 90s is a tiktok zoomer with an addiction to tide pods.

We’re excited to see what happens and we’ll see you in the live chat!

2 million in 23 minutes using only insider information!

Yesterday Banc of California agreed to buy PacWest (a bigger bank by market cap) with the friendly help of Warburg Pincus (private equity) and Centerbridge (private investment firm) giving them ~19% of combined business.

Someone knew in advance and they made a stupid amount of money in the process.

July 24 the FDIC tweets this out.

The art of the subtweet by a government organization ladies and gentleman.

Now let’s look at July 25.

14:24 someone sweeps $PACW (PacWest) 9.5p with 7/28 expiry (three days) at the ask for 6,493 contracts for $330,000.

In total there’s over $700,000 in put premium (bearish flow) at 14:24.

14:29 Banc of California halted for news pending

14:38 news breaks that Banc of California $BAC is acquiring $PACW which is then halted, reopened and then circuit breaker (30% drop stopped) and reopened again at 14:52 eventually closing -27.04%.

The trader who sized up in the 9.5p made two million dollars in 23 minutes.

When we are thinking about the future of RIGD and products beyond 0DTE, automatically detecting these unusual trades and volume spikes and alerting you to them when they happen is a high priority.

[ WSJ ]

Three things we think:

1.) The option market is less RIGGGGGD than the stock market.

Everyone has better information than you.

But the thing is… you can’t hide option flow!

There’s simply not enough volume outside of popular names, so if you know something (like $BANC is acquiring $PAC) and want to take a large position (make two million in 23 minutes)… it will show up in the flow.

In that way it’s almost similar to blockchain.

Everyone can see what’s happening if they know what to look for / how to look and it’s difficult to conceal intentions when trading low volume options and / or when you need to move fast like this $PACW example.

2.) Ricky Bobby was right…

Premarket we’re seeing $PACW +28.48% (complete retrace of yesterday’s move) and $BANC +4.38%.

If you ain’t first… you’re last

Retail traders getting their information through twitter and thinking they’d join the party and pile in on puts are in for a world of pain this morning.

Brightside is if you have $0 in your Robinhood account, then you can’t trade and will never catch a PDT flag.

3.) The website formerly known as twitter is mind cancer when it comes to trading

This chucklead cartoon furu really went 0/3 on his opinions.

If you tell people to sell $SNAP puts and buy yolo calls, you deserve to be sent straight to the gulag.

We were closely monitoring the flow on $MSFT and $GOOG and decided the smartest thing was to sell $MSFT calls. So instead we bought some yolo $240 puts. The stock is -3.34% premarket, close to being in the money but we’ll need a lower move given premiums. The stock should fall given AI revenue has been priced in and they basically said no AI money until 2024.

But since when have markets ever been rational?

Informed Mensa-Level Thoughts on Housing

Interest rates are at 7.26% and JPow is expected to raise another 25bps today… homes are stupid expensive.

Seeing as we currently reside a tent community in the Tenderloin, shower at Planet Fitness and hacked the wi-fi from the nail salon we had no idea how stupid expensive they were until we ran the numbers.

Number running:

$600k house, 20% downpayment @ 7.26% interest rate

You borrow $480,000 for the bank

You pay $700,622 IN INTEREST TO THE BANK (SCAM RIGGD)

Total cost of the loan: $1,180,622 😂

If you bought the same house in 2020 at 3.11% you pay $258,890 in interest (63.05% less) for a grand total of $738,890.

Translation: There are a lot of lucky bastards out there locked into low rate mortgages and no one is selling their house.

Also that rich Indian guy on Netflix who sell courses on how to also get rich is probably onto something when he says that renting is better than owning.

Result(s):

In June existing home sales dropped to a five-month low, with only 1.08 million available for sale down 13.6% year over year.

Meanwhile homebuilder stocks are ripping up this year trading like tech shitcos because people need places to live and if existing homes aren’t getting sold that means more people are going with their only option which is to buy new.

iShares Home Construction ETF $ITB is up 44.60% YTD which is identical to DR Horton Inc (America’s largest homebuilder) up 44.70% YTD.

D.R. Horton has managed to thrive in the high interest rate environment by offering their own fixed-rate mortgages at around 5% on mainly entry level homes with an average sales price of $372,900.

[ yahoo finance ]

True story before we failed out of our third college we lived in a brand new townhouse built by D.R. Horton. Maybe it was the bass music or other devious behavior but the studs were coming out of the walls before someone accidentally knocked a candle over and burned most of the carpet on the first floor. Their homes are much like college students… absolute pieces of crap.

Anyway…

Why buy a house someone has fornicated and pooped in before at 7.26% when you can get a virgin un-pooped new build in suburbia at 5%?

You go with the D.R Horton.

However… it’s possible the music stops for homebuilders and home prices when the Fed declares victory on inflation and starts to lower interest rates.

Why?

U.S home prices hit a record high in May up 0.7%.

Since March 2020 home prices are up 41.79% (thanks Wuhan)!

What this means (remember we are not qualified to comment on anything) there’s an assload of equity just waiting to be unleashed at record highs. This of course could lead to a flip of the supply and demand equilibrium (not sure what this word means just sounded nice) putting pressure on homebuilders who will actually be forced to compete against existing homes.

Once the existing pre-pooped homes come to market… homebuilder margins will come down along with home values.

Of course nobody wants to short them now, but nobody thought people would be financing homes at 7% interest rates and homebuilder stocks would rip the way they have.

There’s no play here nor financial advice of any kind of course of course of course per the course, but it is certainly interesting much like how $HOOD is doomed when they implement permanent PDT flags on their userbase with less assets than us.

Perhaps some names which may be of interest (which sounded great before we looked up their ytd returns):

$COMP - real estate broker and maybe some technology +88.74% ytd

$Z - Zillow house porn website up +58.22% ytd

$RDFN - Redfin secondary house porn website up 251.28% ytd

$OPEN - twitter tough guy openstore Keith Rabois lovechild up 295.45% ytd

If you zoom out… these have a long way to go still before hitting their pre-covid (thanks wuhan) highs.

Housebuilder to house seller flip?

We’ll need Jerome to get his finger off the button, start listening to Pocahontas up in Massachusets and lower rates.

Maybe it’s short the builders and long the sellers equal weight?

But being early to a trade is worse than being early to a party where at least the food spread is nice and you can claim a nice spot on the couch and look at memes on your phone.

Markets are RIGD and SNAP sucks

Snap sucks: Nothing quite like the $SNAP ponzi enrichment dump on public market scheme where the net income loss is only 18.67% higher than stock-based compensation expense.

This thing is a CPA (terrible people) word salad worse than this newsletter.

Reconciliation of GAAP to Non-GAAP unaudited with Adjusted EBITDA reconciliation. Wat mean?

Snapchat is kind of like the Adam Jesus looking no shoes WeWork guy. If the market will let you do it (public for Snap and Masa Son for WeWork), then by all means get as rich as you possibly can.

$SNAP -17.25% in pre-market [ CNBC ]

Today should be insane… watch the early setup for the JPow pump!

Stay nimble.

Stay light.

Stay agile.

Stay blessed.

Most importantly…

Stay frosty!

P.S. Remember… whoever has the most newsletter referrals by this time next week will win a year of RIGD free.

😱

thanks for reading THE REPORT by RIGD AI

First time reader?

Check out what is RIGD AI

we’re building tools for the modern degen investor

follow us on twitter @rigd_ai