World War 3 Cancelled
This Week in the Market
This week, markets are experiencing a wave of optimism as global tensions ease and expectations for interest rate cuts grow. As we predicted, the Iran-Israel situation got sorted out, causing markets to reach new all-time highs. With inflation pressures subsiding and the Federal Reserve signaling a more dovish stance, investors are gaining confidence in the potential for economic stabilization and growth.
Looking ahead, the market is poised to continue its upward trajectory.
Reviewing Past Trade Idea: NVDA
In our first ever newsletter we picked NVDA as our "Current Trade Idea". The stock was trading at $94.31 as of writing that and now it's up at $157.75, delivering a return of over 66%.
We have taken profit but NVDIA maintains a near-monopoly on AI chips so it's understood why many still hold the stock.
Our strategy was non-linear accumulation, which you can read more about here: https://www.a4kcapital.com/newsletter-archive/tariff-trouble
In hindsight we could've picked a much more aggressive strategy like call options but hindsight is always more clear.
Trade Idea: Shorting Capricor Therapeutics
Capricor Therapeutics (CAPR) has rallied hard due to optimism on their cell therapy for Duchenne Muscular Dystrophy. There are many reasons we believe their therapy is ineffective including weak data, shady sample sizing, links to people behind Cassava Sciences (crashed on FDA decision), and raw science. The FDA decision for CAPR will be announced Aug 31rst.
Capricor Therapeutics (CAPR) – Short Secured Put to Hedged Short
This approach is designed to take advantage of CAPR’s elevated implied volatility and binary FDA catalyst, while providing flexibility and controlled risk. It combines an initial options income phase with a transition into a hedged short equity position.
Phase one: Short the stock and sell near-the-money put options to make income. This income ideally pays for the borrow costs associated with borrowing shares of CAPR.
Phase two (near FDA Decision): Stop selling puts and start buying the $30 calls expiring in September. This is to hedge against the theoretical infinite losses that shorting could bring.
Note: All short to option ratios should be 100 shares to 1 contract.
Disclaimer: We are short shares of CAPR and hold options position(s) on CAPR as of writing this. The content in this newsletter is for informational and educational purposes only and should not be considered financial, investment, or legal advice. A4K Capital and its affiliates are not responsible for any financial losses or decisions made based on the information provided.
