So right now, options on these energy stocks are relatively inexpensive. So the way I would look to do this is to simply buy call spreads to the upside. So an Exxon Mobil I'm going out to the September 18th monthly expiration.
So now that we've broken out above 150, especially on the strong volume while outperforming the S&P 500, this points Oracle towards a 185 upside target.
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“Now that we've broken out above 150 ... this points Oracle towards a 185 upside target.”
You look at Adobe, you have Zoom, you have Salesforce. These are all companies that were potentially on the chopping block as a result of AI completely disrupting their businesses, coming back to life. You know, we're really bottom feeding in some of these particular stocks, but they're the ones showing some of the most strength here in this particular market.
Context
“You look at Adobe, you have Zoom, you have Salesforce... we're really bottom feeding in some of these particular stocks”
You look at Adobe, you have Zoom, you have Salesforce. These are all companies that were potentially on the chopping block as a result of AI completely disrupting their businesses, coming back to life. You know, we're really bottom feeding in some of these particular stocks, but they're the ones showing some of the most strength here in this particular market.
Context
“You look at Adobe, you have Zoom, you have Salesforce... we're really bottom feeding in some of these particular stocks”
You look at Adobe, you have Zoom, you have Salesforce. These are all companies that were potentially on the chopping block as a result of AI completely disrupting their businesses, coming back to life. You know, we're really bottom feeding in some of these particular stocks, but they're the ones showing some of the most strength here in this particular market.
Context
“You look at Adobe, you have Zoom, you have Salesforce... we're really bottom feeding in some of these particular stocks”
You know, the traditional AI names like Broadcom, micron, those are still also ones that, you know, at this moment. I think it makes sense to continue to keep exposure in.
Context
“Broadcom, micron, those are still also ones that ... continue to keep exposure in.”
You know, the traditional AI names like Broadcom, micron, those are still also ones that, you know, at this moment. I think it makes sense to continue to keep exposure in.
Context
“Broadcom, micron, those are still also ones that ... continue to keep exposure in.”
Also Hewlett Packard HPE, another one that's worth taking a look at making a new 52 week high today.
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“Also Hewlett Packard HPE, another one that's worth taking a look at”
Full Transcript
And Cerebrus just the latest victim down 13%. Jenny, really appreciate you breaking down those earnings for us. I do want to broaden it out though. Welcome in our next guest joining us this morning Tony Zhang chief strategist over at Options Play. Tony great to have you back on the show. Now as I look broadly across the market, and I was just talking to Jenny Horne about the AI trade. We are seeing energy and commodities gain more momentum. We're seeing a little bit of a broadening out here. How are you looking at this market? Do you view it as us entering a more balanced market where investors need and should have exposure beyond this AI trade? Yeah, absolutely. You see on the back of the PPI number and kind of inflation becoming potentially less of a of a key area of risk here. You know, ten out of the 11 sectors are green on today. But more importantly, if you look at the equal weight S&P 500 index continues to make new all time highs along with the market cap indices. You know, this is showing us that the that the rally is continuing to broaden out. It has broadened out substantially over the last couple of months, especially as while the AI trade unwound a little bit over the last couple of months, we saw that broaden out to the rest of the sectors. You know, we've had a really strong earnings season so far coming off of the second quarter. So, you know, and as you said, energy commodities all at the same time joining in on this as well. So it's not just equities. We're also seeing commodities and other asset classes join in on this move. So how are you looking at it then Tony where are you seeing opportunity here. Is it name specific. Is it sector specific. Yeah we see it across the board. You know we certainly take more of a name specific view for the most part. But we are looking at this from a from an asset and sector rotation perspective. You know, from we look at health care, we look at industrials, we look at technology as the primary driver of outperformance within the sectors. We are looking at commodities as well. Gold and silver obviously have been quite strong here over the last couple of weeks. We've been building positions there. Uranium also continuing to to show show some gains here. But and then within those specific themes, we're looking for individual names with if, when, whenever possible to take exposure on those specific themes. All right. And then I know that you're favoring energy right now. You think it's attractive where it's currently standing in the cycle. Is there a specific name that you like in energy? Yeah, honestly, within the energy complex, you really could throw a dart at the dart board and pick something that has a decent exposure here. But at the moment we're taking a look at Exxon. It's recently breaking out above that one 57.5 resistance level and subsequently come back to retest that level. Despite the weakness that we've seen in energy today. I think it's the only sector in the red today. Exxon continues to hold that one 57.5 level here. And that's really a base that we're looking for for it to continue moving higher from here. So you know as as as as it breaks out above that level, we're targeting that 175 upside, which was the all time high on ExxonMobil, especially as they continue to generate record free cash flow and continue to start paying down debt. And, you know, at the moment, the path to resolution in the Middle East still looks quite drawn out. At the moment, I don't see a clear path as to how the Strait of Hormuz, the Red sea just gets reopened here in the next few weeks. So even though oil prices at the moment have remained relatively depressed as a result of those, those pathways being to some degree still blocked, I think the upside here for oil remains, and I think ExxonMobil would be one of the ways that I would seek upside exposure in an energy. So if we're seeking upside exposure to energy with Exxon, how would you look to trade this then? Tony. Yeah. So right now, options on these energy stocks are relatively inexpensive. So the way I would look to do this is to simply buy call spreads to the upside. So an Exxon Mobil I'm going out to the September 18th monthly expiration. I'm looking at buying a slightly in the money call the 155 call and then selling a 170 call just shy of that all time high earlier today. You can pay about six bucks for that debit spread. And that'll give you about a one and a half risk reward ratio on a debit spread. And specifically using a debit spread like this, that's in the money because the break even price is just a couple of bucks above where it is right now, so that I'm not paying too much in terms of time decay. Because at the moment, you know, oil, oil volatility remains relatively high. And I want to be able to get exposure to that. All right. And I know you also like Oracle. So walk me through your thesis on Oracle. Still down year to date trading higher though on the session right now. Yeah Oracle took more than a 50% haircut in the last couple of months here. But you know as the core we've earnings earlier this week proved that that AI infrastructure build out is not really slowing down. If anything it's gaining momentum here in Oracle is catching a little bit of a bid alongside with that core weave earnings. It managed to break out above that 150 level. That was a key level that we've been keeping an eye out for as a potential reason or a level to start adding to this position. So now that we've broken out above 150, especially on the strong volume while outperforming the S&P 500, this points Oracle towards a 185 upside target. Especially if you look at the fundamentals now that now that it's taken that 50% haircut over the last couple of months, Oracle looks far more compelling from a valuation perspective, especially if you consider the growth profile and how profitable Oracle remains. That's really where I think Oracle in terms of the quote unquote hyperscalers looks the most attractive from a risk reward perspective to the upside. All right. So you like Oracle. You like Exxon. What else are you looking at. I know the commodity space. You mentioned any specific plays in there. And and are they ETFs or are you doing physical assets. Yeah. So we're doing certainly ETFs between GLD and SLV to get access to get exposure to the upside in the commodities themselves within the miners. You know, as options traders, we tend to find that most of the miners are not particularly liquid. So other than Barrick Gold, we're not taking a lot of individual exposure to the miners themselves other than potentially through Gdx, the the mining in the gold mining index. But within uranium, we're looking at CC to the upside. Obviously, the largest uranium miner based in Canada. Just also, again, from a liquidity perspective. Unless you're using you're a the uranium ETF. That's kind of how we've been playing the commodity sector. And you remain heavily invested in tech, even as you're looking more broadly across the market. Where are you seeing the most strength right now, Tony? Where are you looking for the greatest opportunity here? Yeah, I mean, the big the big probably surprise for everyone has been how strong software has been, right? Because software has been the one sector that has been largely decimated over the last couple of years as a result of the AI trade. But we're seeing a bunch of them see quite a bit of upside potential here. You have Adobe, you have Zoom, you have Salesforce. These are all companies that were potentially on the chopping block as a result of AI completely disrupting their businesses, coming back to life. You know, we're really bottom feeding in some of these particular stocks, but they're the ones showing some of the most strength here in this particular market. We're also looking at some of the consumer names. You look at DoorDash, you know, one of the big the one of the ones that we've added quite a bit of exposure here in the last couple of months is DoorDash. So but within, within technology, you know, the software space is probably the one that's most interesting to me outside of the AI names, the traditional AI names like Broadcom, micron, those are still also ones that, you know, at this moment. I think it makes sense to continue to keep exposure in. Also Hewlett Packard HPE, another one that's worth taking a look at making a new 52 week high today. Actually Tony always great to have you on the show. Really appreciate you bringing those trades for us
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