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Markets Rally, But Not Before This Downside Play Went Berserk

by | May 10, 2022 | Options

The markets finally got a break in the selling Tuesday after three of the worst days markets have seen since the pandemic began.

The selling pressure has been immense — everything is getting punished, and it’s even worse for the junk stocks.

Just look at what happened to former EV meme stonk darling, Rivian Automotive Inc. (Nasdaq: RIVN)

Shares tumbled more than 20% Monday as the clock ran out on its IPO selling lockout and… the floodgates opened.

Like a lot of other electric vehicle companies that came to market during the 2021 EV stock craze, Rivian had a lot of buzz at the outset…

The company had an impressive list of backers, getting early investments from the likes of Amazon.com Inc. (Nasdaq: AMZN), General Motors Co. (NYSE: GM) and Ford Motor Co. (NYSE: F)

But the company has failed to deliver on the production floor and in the boardroom since its IPO — and things are coming to a head this earnings season…

It’s also why I was shouting from the hilltops  to anyone who would listen on this past week’s WealthPress Live Roundtable about the short plays on Rivian…

I Hope You Took These Rivian Puts from Our WealthPress Live Roundtable

All three of the above major early investors cited their commitments to Rivian as a drag on their share prices in their recent earnings calls…

Both Ford and Amazon posted a loss in the first quarter of 2021 thanks to Rivian’s poor performance, costing the businesses $5.5 billion and $7.6 billion, respectively.

Things only got worse for Rivian as it just crossed the 180-day mark from its IPO, which means that early stage investors can begin to sell their shares…

Ford announced its plan Saturday to unload 8 million shares of its stake in Rivian…

The news cratered RIVN on Monday, sending the May 13 expiration $30 strike puts straight to the moon!

I called these options out on this past Wednesday’s WealthPress Live Roundtable when they were trading around $2.45…

Tuesday saw those puts peak at $8.64* so if any of you out there took the trade, let me know because I want your autograph!

These discussions are live and unscripted, so it’s impossible to know what we’re going to say next…

Check out the clip to hear what I had to say on this top-tier junk stock on this past WealthPress Live Roundtable. Be sure and tune in at 11:30 a.m. EDT every Wednesday for a half hour as we talk markets — and dish out trade ideas like this!

P.S. We’ve all been there before… You buy the dip in your favorite stock… 

But then that dip turns into a correction, and then that correction turns into a crash.

Before you know it, two to three months of gains are wiped out in two or three days.

This is what we call blowing up an account… And we see new traders make this mistake all the time.

The key here is to protect yourself by using a built-in hedge… 

The hedge allows you to take full advantage of the potential upside, but when the market crash finally does come… you’re more protected. 

See How Roger Does It

WRITTEN BY<br>Lance Ippolito

Lance Ippolito

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