The crypto markets have continued to take it on the chin since the latest mini crash. Bitcoin and Ethereum have entered into correction territory. And a lot of altcoins are following suit. But at least one coin stands out for its resistance to current downward pressure: CRO crypto. Some might better know it as the Crypto.com coin, but either way, it’s been on a tear this year.
At the beginning of the year, CRO crypto was trading for a humble $0.06 a token. These days it’s trading around $0.80. A more than 1,000% increase on the year is nothing to sneeze at. However, that’s still relatively cheap for a coin with around a $20 billion market cap. Especially one with a circulating supply of only 25 billion coins… That doesn’t hold a candle to the likes of some tokens with a supply of one quadrillion.
We expect the value of Crypto.com coin to continue to rise in the coming future. (With some natural ups and downs along the way, of course.) Here’s why this coin is likely to continue its upward momentum.
CRO Crypto: Just Warming Up
Coinbase is still the largest crypto exchange in the U.S. And it gets bonus points for being the first to IPO. However, Crypto.com is giving it a run for its money. Well, at least in terms of brand recognition.
Coinbase’s head start into the mainstream gave it a leg up on a lot of the competition. But several other exchanges are planning to go public soon too. We’ll be curious to see what kind of attention these other exchanges get after their debut on a major exchange. But either way, it’ll be tough to beat the splash Crypto.com got for buying the naming rights to the arena the Los Angeles Lakers play their home games at.
By now, we’re sure you’ve heard that the Staples Center is soon to be no more. As of December 25, it will be known as the Crypto.com Arena.
AEG and https://t.co/mht717OBXs announce their historic naming rights partnership for one of the world’s most iconic sports and live entertainment venues formerly known as STAPLES Center. For full press release visit: https://t.co/jWHLBF7YUv pic.twitter.com/Q6OhDTIZu7
— Crypto.com Arena (@cryptocomarena) November 17, 2021
For a mere $700 million the Lakers will play in Crypto.com Arena for the next 20 years. And on Christmas day, a whole lot of televisions will be turning on to watch the Lakers play there. While it’s tough to say how long it’ll take for this move to become a profitable one, one thing is for sure: A Whole lot more people are about to become familiar with cryptocurrencies.
At last check, roughly 14% of Americans own crypto. That still pales in comparison to the amount of people invested in the stock market. But the amount of crypto-curios that do plan on taking the plunge is expected to rise quite a bit. And there’s an increasing likeliness that the first place people hear about it will be Crypto.com. And that could be huge for CRO crypto. Here’s why…
An Informed Crypto.com Coin Price Prediction
The Crypto.com blockchain was developed with the intention of speeding up global adoption of crypto investing – while safeguarding user data and privacy.
That alone doesn’t differentiate it from other exchanges. But the Crypto.com team had the foresight to create a utility token for its blockchain. While this is seemingly commonplace there days, it wasn’t always so. CRO crypto went live back in late 2018. But now after a couple years of stagnation, it’s starting to catch on. This bodes well for current holders as well as the growing exchange it helps power.
You see, the CRO blockchain’s main function is to provide utility to Crypto.com users. And CRO crypto owners can stake the coins they hold on the Crypto.com chain. These coins act as validators of other transactions… And those who stake can also earn fees for the help they provide in processing transactions on the network.
And those that use CRO crypto on the Crypto.com payment app will see an additional benefit. Those that pay with CRO crypto using the Crypto.com payment app get cash back of up to 20%. Additionally, users can earn annual interest of up to 10-12% on their CRU crypto by staking them on either the Crypto.com exchange app or Crypto.com’s metal Visa Card.
You can read more of the details in the whitepaper.
This mingling of traditional finance-speak into the new era of cryptocurrencies could very well get those that have been sitting by on the fence to jump in. And like we said, there’s an increasingly likely chance the first exchange new investors will have heard about is Crypto.com. While it may sound bullish now, it wouldn’t be at all surprising to see the value of CRO crypto to more than double to $2 a token by the end of the year.
The Bottom Line on CRO Crypto
The reason BNB crypto (AKA the Binance Coin) caught on so fast this year is because it became the favorite token to use on decentralized exchanges. You really can’t get very far on the likes of PancakeSwap without it. And while Crypto.com doesn’t limit folks to using CRO in order to trade other cryptocurrencies, the incentives could be sweet enough to convince people to do just that. That’s why we see a bright future for the likes of the Crypto.com coin.
In the end, it all boils down to simplicity. The same way that Robinhood introduced a new generation to the stock market, Crypto.com is looking to do so with crypto. If the naming rights of Crypto.com Arena turn out to pay for themselves, then we should expect to see even more increasing value of CRO crypto. That is a big “if,” of course. But if any URL were capable of pulling potential crypto investors off the fence, it could very likely be Crypto.com. And that’s why CRO crypto looks like such an appealing investment right now.
Looking for more crypto investment opportunities? We’ve got good news for you. By entering your email address in the box below, you’ll be granted access to Manward Financial Digest. In it, crypto expert Andy Snyder helps guide new and seasoned investors towards the next-generation of cryptocurrencies poised to change how the markets work. And like we said, all you have to do is enter your email in the box below to get started.
The post CRO Crypto: Making a Crypto.com Coin Price Prediction appeared first on Investment U.
High flying growth companies will badly damage new shareholders
The problem with having a huge amount of anticipated growth baked into your stock price is that the expectations become incredibly difficult to achieve….
The problem with having a huge amount of anticipated growth baked into your stock price is that the expectations become incredibly difficult to achieve.
High expectations result in high stock prices.
I’ll post the charts of two of these companies which are household names – Zoom (Nasdaq: ZM) and Docusign (Nasdaq: DOCU):
We will look at Zoom first.
At its peak of $450/share, Zoom was valued at around $134 billion. Keeping the math incredibly simple, in order to flat-line at a terminal P/E of 15 (this appears to be the median P/E ratio of the S&P 500 at the moment), Zoom needs to make $9 billion a year in net income, or about $30/share.
After Covid-mania, Zoom’s income trajectory did very well:
However, the last quarter made it pretty evident that their growth trajectory has flat-lined. Annualized, they are at $3.55/share, quite a distance away from the $30/share required!
Even at a market price of $180/share today, they are sitting at an anticipated expectation of $12/share at sometime in the future.
Despite the fact that Zoom offers a quality software product (any subscribers to “Late Night Finance” will have Zoom to thank for this), there are natural competitive limitations (such as the fact that Microsoft, Google and the others are going to slowly suck away any notion of margins out of their software product) which will prevent them from getting there.
The point here – even though the stock has gone down 60% from peak-to-trough, there’s still plenty to go, at least on my books. They are still expensive and bake in a lot of anticipated growth which they will be lucky to achieve – let alone eclipse.
The second example was Docusign. Their great feature was to enable digital signing of documents for real estate agents, lawyers, etc., and fared very well during Covid-19. It’s an excellent product and intuitive.
They peaked out at $315/share recently, or a US$62 billion valuation. Using the P/E 15 metric, the anticipated terminal earnings is about $21/share.
The issue here is two-fold.
One is that there is a natural ceiling to how much you can charge for this service. Competing software solutions (e.g. “Just sign this Adobe secure PDF and email it back”) and old fashioned solutions (come to my office to scribble some ink on a piece of paper) are natural barriers to significant price increases.
Two is that the existing company doesn’t make that much money:
Now that they are reporting some earnings, investors at this moment suddenly realized “Hey! It’s a long way to get to $21!” and are bailing out.
Now they are trading down to US$27 billion, but this is still very high.
There are all sorts of $10 billion+ market capitalization companies which have featured in this manner (e.g. Peleton, Zillow, Panantir, etc.) which the new investors (virtually anybody buying stock in 2021) are getting taken out and shot.
This is not to say the underlying companies are not any good – indeed, for example, Zoom offers a great product. There are many other instances of this, and I just look at other corporations that I give money to. Costco, for example – they trade at 2023 anticipated earnings of 40 times. Massively expensive, I would never buy their stock, but they have proven to be the most reliable retailer especially during these crazy Covid-19 times.
As the US Fed and the Bank of Canada try to pull back on what is obviously having huge negative economic consequences (QE has finally reached some sort of ceiling before really bad stuff happens), growth anticipation is going to get further scaled back.
As long as the monetary policy winds are turning into headwinds (instead of the huge tailwinds we have been receiving since March 2020), going forward, positive returns are going to be generated by the companies that can actually generate them, as opposed to those that give promises of them. The party times of speculative excess, while they will continue to exist in pockets here and there, are slowly coming to a close.
The super premium companies (e.g. Apple and Microsoft) will continue to give bond-like returns, simply because they are franchise companies that are entrenched and continue to remain dominant and no reason exists why they will not continue to be that way in the immediate future. Apple equity trades at a FY 2023 (09/2023) estimate of 3.8% earnings yield, and Microsoft is slightly richer at 3.2%. Just like how the capital value of long-term bonds trade wildly with changes of yield, if Apple and Microsoft investors suddenly decide that 4.8% and 4.2% are more appropriate risk premiums (an entirely plausible scenario for a whole variety of foreseeable reasons), your investment will be taking a 20% and 25% hit, respectively (rounding to the nearest 5% here).
That’s not a margin of error that I would want to take, but consider for a moment that there are hundreds of billions of dollars of passive capital that are tracking these very expensive equities. You are likely to receive better returns elsewhere.
Take a careful look at your portfolios – if you see anything trading at a very high anticipated price to cash flow expectation, you may wish to consider your overall risk and position accordingly. Companies warranting premium valuations not only need to justify it, but they need to be delivering on the growth trajectory baked into their valuations – just to retain the existing equity value.
Stockman: A (Bad) Tale Of Two Inflations
Stockman: A (Bad) Tale Of Two Inflations
Authored by David Stockman via Contra Corner blog,
Our paint by the numbers central bankers have…
Stockman: A (Bad) Tale Of Two Inflations
Our paint by the numbers central bankers have given the notion of being literalistic a bad name. For years they pumped money like mad all the while insisting that the bogus “lowflation” numbers were making them do it. Now with the lagging measures of inflation north of 5% and the leading edge above 10%, they have insisted loudly that it’s all “transitory”.
Well, until today when Powell pulled a U-turn that would have made even Tricky Dick envious. That is, he simply declared “transitory” to be “inoperative”.
Or in the context of the Watergate scandal of the time,
“This is the operative statement. The others are inoperative.” This 1973 announcement by Richard Nixon’s press secretary, Ron Ziegler, effectively admitted to the mendacity of all previous statements issued by the White House on the Watergate scandal.
Still, we won’t believe the Fed heads have given up their lying ways until we see the whites of their eyes. What Powell actually said is they might move forward their taper end from June by a few month, implying that interest rates might then be let up off the mat thereafter.
But in the meanwhile, there is at least six month for the Fed to come up with excuses to keep on pumping money at insane rates still longer, while defaulting to one of the stupidest rationalizations for inflation to ever come down the Keynesian pike: Namely, that since the American economy was purportedly harmed badly, and presumably consumers too, with the lowflation between 2012 and 2019, current elevated readings are perforce a “catch-up” boon. That is, more inflation is good for one and all out there on the highways and byways of main street America!
You literally can’t make up such rank humbug. Even then, what the hell are they talking about?
The shortest inflation measuring stick in town is the Fed’s (naturally) preferred PCE deflator, but here it is since the year 2000. The 21 years gain is 1.93% per annum; and the 9-year gain since inflation targeting became official in January 2012 is 1.73%. Given that the PCE deflator is not a true fixed basket inflation index and that these reading are close enough to target for government work anyway, even the “catch-up” canard fails. That’s especially true because given the virtual certainty of another year or two of 4-6% CPI inflation, even the cumulative measures of inflation will register well above the Fed’s sacrosanct 2.00% target.
Moreover, importantly, pray tell what did this really accomplish for the main street economy?
On the one hand, savers and fixed income retirees have seen their purchasing power drop by 39% since 2000 and 18% since 2012. At the same time, wage workers in the tradable goods and services sectors got modest wage gains with uniformly bad spill-over effects. To wit, millions lost their jobs to China, India and Mexico etc. because their nominal wages were no longer competitive in the global supply base, while those that hung on to their domestic jobs often lost purchasing ground to domestic inflation.
Consequently, the chart below is an unequivocal bad. It is the smoking gun that proves the Fed’s pro-inflation policies and idiotic 2.00% target is wreaking havoc on the main street economy and middle class living standards.
Loss of Consumer Purchasing Power, 2000-2021
In short. the group-think intoxicated Fed heads, and their Wall Street and Washington acolytes, are hair-splitting inherently unreliable and misleading numbers as if the BLS inflation data was handed down on stone tablets from financial heaven itself. At the same time, the rampant speculative manias in the financial markets that their oceans of liquidity have actually generated is assiduously ignored or denied.
We call this a tale of two inflations because the disaster of today’s rampant financial asset bubbles is rooted in pro-inflation monetary policies which are belied by both theoretical and empirical realities, which we address below.
First, however, consider still another aspect of the inflationary asset bubble which is utterly ignored by the Fed. In this case, the group think scribes of the Wall Street Journal inadvertently hit the nail on the head, albeit without the slightest recognition of the financial metastasis they have exposed.
We are referring to a recent piece heralding that private-equity firms have announced a record $944.4 billion worth of buyouts in the U.S. so far this year. That 250% of last year’s volume and more than double that of the previous peak in 2007, according to Dealogic.
As the WSJ further observed,
Driving the urge to go big are the billions of dollars flowing into private-equity coffers as institutions such as pension funds seek higher returns in an era of low interest rates. Buyout firms have raised $314.8 billion in capital to invest in North America so far in 2021, pushing available cash earmarked for the region to a record $755.6 billion, according to data from Preqin.
As the end of the year approaches, big buyouts are coming fast and furious. A week ago , private-equity firms Bain Capital and Hellman & Friedman LLC agreed to buy healthcare-technology company Athenahealth Inc. for $17 billion including debt. A week earlier, KKR and Global Infrastructure Partners LLC said they would buy data-center operator CyrusOne Inc. for nearly $12 billion. And the week before that, Advent International Corp. and Permira signed an $11.8 billion deal for cybersecurity-software firm McAfee Corp.
The recent string of big LBOs followed the $30 billion-plus deal for medicalsupply company Medline Industries Inc. that H&F, Blackstone Inc. and Carlyle struck in June in the largest buyout since the 2007-08 financial crisis.
Needless to say, these LBOs were not done on the cheap, as was the case, oh, 40 years ago. In the case of AthenaHealth, in fact, you have a typical instance of over-the-top “sloppy seconds”. That is, it was taken private by Veritas Capital and Elliott Management three years ago at a fulsome price of $5.7 billion, which is now being topped way up by Bain Capital and Hellman & Friedman LLC in the form of an LBO of an LBO.
According to Fitch, AthenaHealth had EBITDA of about $800 million in 2020, which was offset by about $200 million of CapEx or more.That means that at the $17 billion deal value (total enterprise value or TEV), the transaction was being priced at 28X free cash flow to TEV.
That’s insane under any circumstances, but when more than half of the purchase price consists of junk debt ($10 billion out of $17 billion), it’s flat out absurd. The reason it is happening is the Fed’s massive financial market distortion: Bain Capital and Hellman & Friedman are so flush with capital that it is burning a hole in their pocket, while the junk debt is notionally so “cheap” that it makes a Hail Mary plausible.
But here’s the thing.
This is a generic case: the Fed’s radical low interest rate policy is systematically driving the allocation of capital to less and less productive uses. And clearly private equity sponsored LBOs are the poster boy, owing to the inherent double whammy of misallocation described by the WSJ above.
On the one hand, capital that should be going to corporate blue chip bonds is ending up on the margin in private equity pools as pension funds, insurance companies and other asset managers struggle to boost returns toward exaggerated benchmarks inherent in their liabilities.
At the same time, private equity operators are engaged primarily in the systematic swap of equity for debt in LBO capital structures, such debt taking the form of soaring amounts of junk bonds and loans.
The higher coupons on junk debt, in turn, attract more misallocation of capital in the debt markets, while at the same time grinding down the productivity and efficiency of the LBO issuers. That because the hidden truth of LBOs is that on the margin they are nothing more than a financial engineering device that strip-mines cash flows that would ordinarily go into CapEx, R&D, work-force training, marketing, customer development and operational efficiency investments and reallocates these flows to interest payments on onerous levels of the junk debt, instead.
That’s the essence of private equity. The underlying false proposition is that 29-year old spread-sheet jockeys at private equity shops tweaking budgets downward for all of these “reinvestment” items—whether on the CapEx or OpEx side of the ledger—know more about these matters than the industry lifetime veterans who typically man either public companies, divested divisions or pre-buyout private companies—before they are treated to the alleged magic of being “LBO’d.”
In fact, there is no magic to it, notwithstanding that some LBO’s generate fulsome returns to their private equity owners. But more often than not that’s a function of:
Short-term EBITDA gains that are hiding severe underling competitive erosion owing to systematic under-investment;
The steady rise of market PE multiples fueled by Fed policies, which policies have drastically inflated LBO “exit” values in the SPAC and IPO markets.
So at the end of the day, the Fed’s egregious money-pumping is fueling a massively bloated LBO/junk bond complex that is systematically curtailing productive main street investment and therefore longer-term productivity and economic growth.
And, of course, the proceeds of buyouts and junk bonds end up inflating the risk assets, which are mostly held at the tippy top of the economic ladder. And that’s a condition which has gotten far worse since the on-set of Greenspanian “wealth effects” policy in the late 1980s. As shown below, between Q4 1989 and Q2 2021:
Top 1%: Share of financial assets rose from 21.0% to 29.2%;
Bottom 50%: Share of financial assets fell from 7.2% to 5.6%
Meanwhile, the good folks are WSJ saw fit to provide a parallel analysis that further knocks the Fed’s lowflation thesis into a cocked hat. In this case, the authors looked at the average domestic airline ticket price and found that it is about the same today as 25 years ago, $260 today versus $284 in 1996.
And that’s before adjusting for cost inflation. So the question recurs: How is it possible that the airline industry hasn’t increased ticket prices in over two decades while its fuel and labor costs, among others, have been marching steadily higher?
As the WSJ noted,
It isn’t possible really. Most of us are paying a lot more to fly today, thanks to a combination of three covert price increases.
First, airlines have unbundled services so that fliers pay extra for checking luggage, boarding early, selecting a seat, having a meal and so on. The charges for these services don’t show up on the ticket price, but they are substantial.
Second, the airplane seat’s quality, as measured by its pitch, width, seat material and heft, has declined considerably, meaning customers are getting far less value for the ticket price.
And third, many airlines have steadily eroded the value of frequentflier miles, increasing costs for today’s heavy fliers relative to those in 1996.
Now, did the hedonics mavens at the BLS capture all these negative quality adjustment in airline ticket prices?
They most decidedly did not. As shown below, the BLS says ticket prices have only risen by 5.6% during the same 24 year period or 0.23% per annum. But you wonder with jet fuel costs up by 294% during that period and airline wages higher by 75%—why aren’t they all bankrupt and liquidated?
The answer, of course, is that the BLS numbers are a bunch of tommy rot. Adjusted for all the qualitative factors listed above, airline tickets are up by a hell of a lot more than 0.23% per year. Yet the fools in the Eccles Building keep pumping pro-inflation money— so that the private equity game of scalping main street cash flows thrives and middle class living standards continue to fall.
CPI for Airline Fares, 1996-2021
Moreover, the backdoor prices increase embedded in airline fares are not unique. These practices are also common in other industries, whether it’s resort fees in hotels, cheaper raw materials in garments and appliances, or more-stringent restaurant and credit-card rewards programs. As the WSJ further queried,
Consider the following comparison: Which one is cheaper, a 64-ounce container of mayonnaise at a warehouse club that costs $7.99, or a 48-ounce bottle of the same brand at a supermarket for $5.94?
Most people will guess the warehouse club because of its low-price image. If you do the math, the price per ounce is roughly the same. But if you consider that the warehouse club requires a separate mandatory membership fee, the customer is actually paying more per ounce at the warehouse club.
Known as two-part pricing, the membership fee camouflages the actual price paid by customers—and is behind the success of Costco,Amazon and likely your neighborhood gym. (A gym’s initiation fee, a landlord’s application or administrative fee, and an online ticket seller’s per-transaction processing fee all serve the same purpose.)
Yet this is just a tiny sampling of the complexity of providing apples-to-apples pricing trends at the item level over time—to saying nothing of proper weighting of all the items that go into the index market basket.
The implication is crystal clear. As per Powell’s belated recant on the “transitory” matter, the Fed doesn’t know where true inflation has been or have the slightest idea of where it is going.
So the idea of inflation targeting against an arbitrary basket of goods and services embodied in the PCE deflator, much of which consists of “imputations” and wildly arbitrary hedonic adjustments, is just plan nuts.
They only “inflation” measure that is in the proper remit of the Fed is monetary inflation—-something at least crudely measured by its own balance sheet.
On that score the Fed is a infernal inflation machine like no other.
And for want of doubt that the resulting massive asset inflation and rampant financial engineering on Wall Street that flows from Fed policies is wreaking havoc on the main street economy, note this insight from the always perceptive Bill Cohan:
AT&T bought TimeWarner for a total of $108 billion, including debt assumed, and three years later agreed to spin it off it to Discovery for—what?— $43 billion in stock, cash and assumed debt. By my calculation, that’s a $65 billion destruction of value in three years. That’s not easy to do.
He got that right. At the end of the day these massive accounting write-offs are just a proxy for the underlying economic destruction.
As we said, a tale of two inflations. And neither of them imply anything good.
Fisker Is One to Buy, But Not Quite Yet
It’s stalled, but can it motor higher? The stock in question is Fisker (NYSE:FSR) and its in-tow FSR stock.
Source: T. Schneider / Shutterstock.com
It’s stalled, but can it motor higher? The stock in question is Fisker (NYSE:FSR) and its in-tow FSR stock.
Source: T. Schneider / Shutterstock.com
And based on what’s happening off and on the FSR price chart, the best course of action is to use those optionable safety features sometimes forgotten to avoid being a crash test dummy. Let me explain.
Sell the news? It could be that simple in shares of FSR. But you never know either, well until it’s too late.
Three weeks ago Fisker investors got a first glimpse of the company’s luxury Fisker Ocean electric vehicle (EV). And sell they did, with only gratuitous hindsight making it appear that selling the news was the singular course of action to take.
The fact today is FSR stock has managed to shed nearly 20% since unveiling its inaugural EV at the LA Auto show, despite receiving accolades for the vehicle.
Fisker’s Awarded With Profit Taking
The EV “asset-light” auto designer took home a prized ZEVAS Award for zero-emission vehicles in the category of “best crossover vehicle” priced under $50,000. Nice, right? I like to think so.
Still, in walking the aisle alongside FSR’s hefty bearish population of nearly 28% and investors caught taking profits, shares were up a near picture perfect 80% in just two months leading into the auto event.
So there’s that, right? I suppose.
As well and for FSR investors yearning for additional reasons driving the stock’s price contraction, fingers can be pointed at inflation fears, Fed-speak and most recently, the covid-19 Omicron varient in recent days.
It’s fair enough to say and see that many other EV plays such as QuantumScape (NYSE:QS) or Lucid Motors (NASDAQ:LCID), as well as other higher multiple growth plays have been hit by those macro irritants, putting them in the same miserable boat as FSR stock investors.
But it’s likely just a bump in the road when it comes to Fisker.
The thing is if you’re going to make a play on the next Tesla (NASDAQ:TSLA), investors would be hard-pressed to do much better than FSR stock, within the framework of an EV startup that’s yet to put the rubber to the road.
And I’m not alone in thinking that about Fisker shares.
InvestorPlace contributor Will Ashworth notes Fisker’s Ocean series has what I’ll just call the goods under the hood once production commences next November.
And with sales pegged at $2.2 billion for 2023, FSR’s forward price-to-sales ratio near 3x appears to an attractive value proposition for a growth stock of Fisker’s caliber.
FSR Stock Weekly Price Chart
Click to EnlargeSource: Charts by TradingView
When it comes to owning FSR, I see a couple different ways to position for vastly-reduced risk and an eye on holding for a few years.
First, if shares can continue to retreat towards $15 – $16.75, purchasing FSR stock on weakness makes sense. This area has channel and Fibonacci support to back up the buy decision.
As well, a currently bearishly-crossed and overbought stochastics should, at a minimum, be in neutral territory. It could also be more opportunistically flattening or even generating a bullish buy signal, if shares were to decline into the support zone.
Like Will, I don’t anticipate FSR will see $10 again given its valuation and sales forecast. And if it did, it could mean some serious missteps by the company and more of a trap for buyers than of actual value.
That being said, I’d attach any potential purchases with a stop loss. Based on today’s channel, but also appreciating trader missteps have happened in the past like last October’s, $12.50 – $13 looks about right.
Alternatively, a fully-hedged bullish vertical or collar strategy rather than exiting on a technical failure might be considered.
Lastly, and given the reality that charts can sometimes turn on a dime, I’d simply watch for a stochastics crossover. A momentum move higher is always possible in a name like FSR.
Should that occur, placing an intermediate-term collar whose strike structure mimics an out-of-the-money bull call spread and adjusting the position over time is one way to avoid becoming a crash test dummy and hopefully enjoy some future vroom, vroom in FSR stock.
On the date of publication, Chris Tyler did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
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