Did You Buy The Dip? The Three Crypto Names We Suggested Bargain Hunters Consider Monday Were All Up Tuesday. What We Like Now.

The Formula One Scuderia Ferrari sponsored by AMD (photo via Jisakutech).

Update On Our Crypto Crash Names

Over the weekend, as crypto crashed, we mentioned a few names for bargain hunters to consider on Monday (Crypto Crash: Bargain Hunting):  the bitcoin miner Marathon Digital Holdings, Inc. MARA, the bitcoin hoarder MicroStrategy, Inc. MSTR, and the retail crypto trading platform Coinbase Global, Inc. COIN. All three bounced on Tuesday: 

Of those three, our system was still bullish on MSTR and MARA Tuesday night, but not COIN. None of the three were in our top ten on Tuesday night though. 

What We Like Now: Chips

As a reminder, our site uses its gauges of stock and options market sentiment to estimate returns over the next six months, and it posts its top ten names for subscribers on our website and app every night. On Tuesday night, four of our top ten names were chipmakers, with the number one name being Advanced Micro Devices, Inc. AMD. 

Not The First Time AMD Has Been A Top Name

Tuesday wasn't the first time AMD was one of our top ten names. For example, it was in our top ten on August 19th, 2020. 

Screen capture via Portfolio Armor on 6/19/2020. 

Over the next six months, it was up nearly 77%. 

In Case We're Wrong About AMD

In the event we end up being wrong about AMD, or the market moves against us, here are two ways you can limit your downside risk. 

Uncapped Upside, Positive Cost

As of Tuesday's close, this was the optimal put option to hedge 100 shares of AMD against a greater-than-25% drop by mid-June. 

This and the subsequent screen captures are via the Portfolio Armor iPhone app. 

The cost of this protection was $810, or 5.82% of position value. That cost was calculated conservatively, using the ask price of the puts; in practice, you can often buy and sell options at some price between the bid and ask. 

Capped Upside, Negative Cost

This was the optimal collar, as of Tuesday's close, to hedge against a >25% drop in AMD while not capping your possible upside at less than 50% over the next several months. 

In this case, the cost was (very slightly) negative, meaning you would have collected a net credit of $10 when opening the hedge, assuming, to be conservative, that you placed both trades at the worst ends of their respective spreads (buying the puts at the ask and selling the calls at the bid).