I’ve Found The Next Master Trader

May 15, 2023

RobinHood (HOOD) is a low-cost broker that took off in popularity during the pandemic for offering free commissions and a simple user interface. Those who received covid payouts loaded up their Robinhood accounts and watched videos on YouTube and TikTok and started their trading journey.

The Influencer “Trader” was born.

It’s easy to make video content, pay for followers, and use search engine optimization to get your videos to be the most played on a platform. The pandemic helped merge the world of content creation and trading, many of whom showcased the ease of trading by using the Robinhood platform. But did viewers of that content learn how to trade from these new master traders?

People later learned throughout 2022 that trading is hard. As a result, Robinhood is watching its users disappear as people blow through accounts and head back to work full-time.

While Influencer “Traders” are still popular, a lot of the less-popular ones have also disappeared when trading got more difficult than buying a long call on Tesla (TSLA) and waiting a week to double their money.

Now, Artificial intelligence is front and center and once again people are looking for the next master trader.

Of 2000 surveyed Americans, 50% of them said they used ChatGPT for stock recommendations.

An alternative to asking a chatbox for financial advice is to let AI pick your stocks for you!

The AI Powered Equity ETF (AIEQ) has $121 million in managed assets, so maybe it has the answers to become the next master trader we should all follow.

The fund is actively managed and invests primarily in equity securities listed on a U.S. exchange based on the results of a proprietary, quantitative model (the “EquBot Model”) developed by EquBot Inc. (“EquBot”) that runs on the IBM Watson™ platform.

It has a year-to-date gain of -1.2%. Bummer.

Ok, Jeff, reel it back in. Where am I going with this?
Well, that trading is hard and takes effort.

Social media influencers and Artificial Intelligence may get all the attention, but it’s you, the readers of this newsletter – the ones putting in the effort and learning – you are the ones who are the next true master traders in my eyes.

I mentioned Robinhood (HOOD) and they have a few things planned to increase revenues and users on their site, but the company is in a trading range right now.

Five months into the new year and HOOD is stuck between $8 and $10 a share. Sure, it flirted with $11.50 but that was rejected quickly.

This is a stock that you can time your entries, whether you are buying the stock, shorting the stock, or using options.

This is a trade that I would feel comfortable legging into – meaning when HOOD trades lower, around the $8 area, I would start off by selling puts.

At the time of writing this, the 16 JUN $8 put is going for about $21 on an $800 investment. That’s a 2.5% return in 32 days, or about 28% annualized.

What about selling a call spread here using the $10 call? HOOD is at the lower part of the range, so if it’s going to go higher from here, that $10 call option in your call spread will get more expensive. So don’t take the low credit right now if you can wait until HOOD is trading back near the top of the range. Then you can trade calls. You’ll get more premium for the same call spread.

Now, if you don’t like my stock tip of the day, here’s what the AI chatbots told me.

So, there you have it. You have four trading ideas for today. I’ll see you back here tomorrow unless the AI chatbots have taken over.

If you have any questions, comments, or anything we can help with, reach us at any time.
Email: [email protected]
Phone: (866) 257-3008

Jeff Wood

Editor, Filthy Rich Dirt Poor
Coach, Options Testing Lab

Any trade or trade idea discussed is for educational purposes only.  They will not be tracked as an official trade recommendation. 

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