6/27 Daily Plan: Playing Cards Revealed
Micron DCF Conclusion Study Comes Through
Hey Guys -
Congrats if you held Micron Sell Puts through earnings. Model comes through, again.
I am making yesterday’s Micron DCF Conclusion available to the public (link here), where you will see my Fair Value estimate on Micron at 130-135.
Image below.
Where is it now post-earnings? 130-135.
Cool right?
Is this a coincidence? Perhaps. But there is a bit of finesse to it.
I’d say the substantial value of my personal CFA Charterholder journey comes down to being able to learn the art of the Discounted Cash Flow Model (DCF).
Today’s post will be concise. This is because I am doing research in the background to find new ideas (like Micron) for Q3, which starts next Monday.
Let’s talk about my methodology in plain english.
Step 1: Choose a primary market. You can have a secondary market, but you must have a primary market. Mine is NQ (Nasdaq-100). The more you understand your primary market, the more comfortable you will be when taking heat (it will happen).
Step 2: Understand the top companies/movers in that ecosystem. What drives it/what boosts sentiment/what harms confidence.
Step 3: Do a DCF Conclusion Study (unique to my personal observations) on the top companies within the index.
Step 4: Choose a Vehicle to express a view (if one desires to) only when the context has an opportunity
Calls (ITM/ATM/OTM?)
Direct Shares
Sell Puts (I rarely go long puts)
In Micron’s case, I believed fair value shared with members was 130-135 when the stock traded 140 ahead of earnings.
Although the stock IS going to go higher long-term (I can almost assure you of this) and could have run higher post earnings, probability made it difficult for me to suggest Calls or Direct Shares for this specific event.
Remember, stocks go up and down. It’s all a Sequence. Everything in the market is a constantly evolving Sequence.
So what do we do? Sell Puts at strategic technical structure levels beneath fair value.
Result: After earnings, even though Micron falls post earnings, it doesn’t fall enough. Implied Volatility crush takes place.
Stock goes down. But our DCF Conclusion Study and thoughtful Strike and Expiry selection means that we went synthetically Long and still won.
Like I expressed to members yesterday, if we get assigned on MU, we will win big on Micron long-term. You have to trust me on this.
If we don’t get assigned, option premiums will evaporate, and we’ll win small (like this time)
Either way, I did everything I could to find members a win-win scenario.
I’ve got more ideas as Q3 comes through.
All I need from you is Belief. Faith. And Patience. We’re in this together.
With these 3 components, I will do my best to ascend you to (more) victory. I’m sure you’re already doing well. My mission is to help you preserve it, and extend it.
Members will be served first, as always.
Thank you for your trust in the model.
Have a great weekend, folks!
-Larry
P.S. - You’re all Gs. I wish you the best.
Important Links (Organized DCF Conclusion Studies By Indices)
Semiconductor SOXX ETF Top Stocks DCF Conclusion Studies (Newly Added - will add the other SOXX names in here shortly): https://larrycheung.substack.com/t/soxx-etf-top-10-dcfs
DOW Top Stocks DCF Conclusion Studies:
https://larrycheung.substack.com/t/dow-etf-top-10-dcfs
QQQ ETF Top Stocks DCF Conclusion Studies: https://larrycheung.substack.com/t/qqq-etf-top-10-dcfs
SPY ETF Top Stocks DCF Conclusion Studies: https://larrycheung.substack.com/t/spy-etf-top-10-dcfs
Conclusion Table on Dow and QQQ ETF Stocks
Link to DCF Full Archive: https://larrycheung.substack.com/t/dcf-modeling-fundamental-analysis
Link to Educational Guides: https://larrycheung.substack.com/t/educational-guides
Q&A: Why I focus on NQ as a primary market.
My focus: I now focus about 95% of my attention on price action when it comes to the indices. I would strongly encourage spending lots of “screen time” for folks who want to navigate the market.
Note: I publish Monday-Thursday. These are my opinions based on my own research and my model may or may not aligned to the market’s thinking. I have to repeat this in all my notes as there is an element of the unknown in today’s strange macro environment.
Disclaimer: My investment community is not investment, financial, or trading advice, but for educational informational purposes only. I am happy to share my personal opinions which I provide as my personal journal. Trading of any kind of securities involves a lot of risk. No guarantee of any profit whatsoever is made. Investors may lose everything they have. Practice extreme caution. No profit is guaranteed whatsoever, You assume the entire cost and risk of any trading or investing activities you choose to undertake. You are solely responsible for making your own investment decisions. Owners/authors of this publication are NOT registered as securities broker-dealers or investment advisors either with the U.S. SEC, CFTC or with any other securities/regulatory authority. Make sure to consult with a registered investment advisor, broker-dealer, and/or financial advisor.