To provide a quick summary of the bullish case for NVDA stock, it comes down (obviously) to artificial intelligence. No matter how much criticism and controversy AI generates, the reality is that AI has fundamentally shifted our paradigm. If you’re not on board with the AI narrative, you’re hopelessly lost. And since NVIDIA sells differentiated compute, it’s arguably less likely to stumble under commoditization concerns.

However, this line of reasoning represents thesis risk, which is very much limited for NVIDIA — and some might argue nonexistent. What investors and traders should be concerned about is equity risk. This is a different category and requires a nuanced, analytical approach.

Too often, when it comes to popular securities like NVDA stock, financial writers wax poetic about AI spending, infrastructure demand and projected runways. Well, I’m sorry, but it makes me wonder why publishers even pay money for such garbage contributions. These are narratives that are clearly baked into the story.

What serious analyst is declaring that AI is a fad and demand will collapse next quarter? No one — and that’s the risk. When you have an environment where people are constantly bidding up the bullish narrative and giving little thought to the bearish case, unnecessary exuberance can easily embed itself in the target security.

Fundamentally, the risk isn’t that no one believes in the AI narrative undergirding NVDA stock; no, it’s that everybody believes it. As such, there is a premium associated with the enthusiasm. Essentially, the spread between expectation and eventual reality must be robust enough to justify this premium.

It’s quite possible, then, to have a situation where the thesis pans out but the equity doesn’t cooperate. It’s not that the thesis was wrong (because it wasn’t). Rather, the thesis didn’t quite cover the differential between expectations and reality.

Why You Need to Pay Attention to the Smart Money’s Take on NVDA Stock

Interestingly, the smart money has a very different approach to your typical buy-and-hold retail perspective — and that’s evidenced by the volatility skew. By definition, the skew identifies implied volatility (IV) across the strike price spectrum of a given options chain. Since IV reflects the pricing potential of a security at the selected strike, traders have an incentive to cover the implied move.

Basically, the skew can be considered an insurance market. On any given day, a popular security will go up or it will go down. Professional traders, especially those responsible for massive funds, must probabilistically determine which trajectory is more likely. Subsequently, the hedging transactions distort the skew, allowing observers to better determine smart money sentiment.

What’s fascinating about the further-out July 17 expiration date is that the volatility skew for Nvidia stock shows relative put dominance across the strike price spectrum. The most obvious point is that below the spot price, put IV rises sharply (and swings above calls at the lowest depths). This framework represents classic crash insurance behavior; that is, the market is assigning a meaningful premium to downside protection.

Does that mean that a crash is imminent for NVDA stock? Not at all — the smart money shouldn’t automatically be considered prescient. However, we give these traders the label “smart” because of their sophisticated transactional acumen.

I would also argue here that these pros are intellectually honest about NVDA stock. While they recognize that Nvidia can march higher (judging by the rising call IV), put dominance is still the order of the day for strikes above spot.

Conclusion? The smart money apparently believes NVIDIA stock is fairly priced relative to current expectations. And I think that’s the right take. When you look at the same skew for something like Micron Technologies (NASDAQ: MU), traders are pricing for upside convexity all the way, with seemingly little prioritization for downside protection.

That makes me nervous. NVIDIA stock also makes me pensive at this hour, but at least the smart money is recognizing the risk.

Going Conservative on NVIDIA Stock

Naturally, the disagreement about NVDA stock isn’t about whether it’s a good opportunity in the abstract. It’s up roughly 59% in the trailing year; it’s a good opportunity. But the question is about the magnitude of goodness. Again, it’s the differential between expectations and reality.

I’m going to ride with the smart money — and the data would suggest the same. If you swing back using a dataset to 1990, a random 10-week-long position would be expected to generate a forward median distribution landing between $208 and $235 (assuming a starting price of $214.86).

Under the current quantitative structure, in the past 10 weeks, NVIDIA stock printed six up weeks, leading to an upward slope across the period. Under this specific 6-4-U sequence, you would expect the forward 10-week distribution to land between $208 and $240.

So, the math is quite simple. Comparing aggregate to conditional sequences, you would statistically (from an observational standpoint) be looking at no added risk. But on the reward side, the distribution shifts positively, with the right-side tail differential hitting 2.13%.

Now, is 2.13% that much of a difference compared to a randomly aggregated 10-week-long position? Since the reward penalty is 0%, there is a modestly positive asymmetry here. However, it’s not a pound-the-table type of play.

This is where a very conservative bull call spread might be in order. Probably the most ambitious spread I would be looking at is the 220/225 bull spread expiring July 17. With this trade, I’m looking for NVDA stock to rise through the $225 strike at expiration. If it does, the maximum payout clocks in at nearly 144%.

Now, for the million-dollar question: how in the world does that make any sense? It doesn’t until you look at the quantitative data.

First, let’s go over the fundamental reasons why LCID stock has performed so poorly — and why some traders might view Lucid as so bad, it’s good. Obviously, it’s impossible to ignore the EV manufacturer’s horrific financial disclosure for the first quarter, where it suffered its biggest revenue miss in more than four years. Also, the suspension of full-year guidance was icing on the bear cake.

Pouring salt on open wounds were production problems with the Gravity SUV. While the underlying issue was reportedly solved, the matter further represented an example of Lucid struggling to scale manufacturing efficiently. As well, you have the chokepoints of persistent losses and ugly margins. Basically, there hasn’t been a whole lot to be excited about when it comes to LCID stock.

And yet, Lucid isn’t without merits. Some of the most speculative traders appear to be focused on Uber Technologies (NYSE: UBER) expanding its partnership with the EV maker. Moreover, Saudi Arabia continues to provide significant financial support. In addition, production of Gravity continues to move forward despite the hiccups.

Sure, the equity market is clearly focused on the losses, production issues and the guidance withdrawal. However, call buyers (the options speculators) appear to be equally focused on the positives. Because so much bad news is baked into LCID stock, it arguably wouldn’t take much to spark a turnaround, no matter how brief.

Plus, with the calls being nominally cheap, there’s almost a nihilistic attitude toward Lucid stock. Yes, there’s risk — but the upside potential is gargantuan.

Volatility Skew Reveals How the Smart Money is Approaching LCID Stock

One of the best pieces of evidence regarding the above assertion comes from the volatility skew. By definition, the skew represents implied volatility (IV) across the strike price spectrum of a given options chain. Since IV reflects the pricing potential of the selected strike, sophisticated traders attempt to cover the underlying implied move.

Think of the volatility skew as an insurance market. On any given day, a popular security is likely going to move up or it’s going to move down. Options traders, especially the pros that are handling massive funds, must decide which trajectory is more likely — and subsequently hedge against that risk.

Typically, a skew will feature put dominance on the left-side tail, thus providing insurance against downside movements. However, call dominance tends to be the order of the day on the right side, which allows traders to lever up rallies. In this manner, sophisticated players make sure they’re not caught out, either with a sudden correction or a blistering blowoff.

However, the skew for Lucid stock (for the June 26 expiration date) is rather unique. As expected, put dominance exists on the left-side tail, implying a prioritization of risk mitigation. With LCID stock losing about 78% over the past 52 weeks, that’s a smart play — I’d go so far as to say it’s the only play.

But the revealing part comes from the right side. As the strike price rises, call dominance becomes more prominent. Essentially, the skew for LCID stock is convexity-oriented. Yes, it’s obvious that traders don’t want to be caught with their pants down if Lucid tumbles. Yet they also don’t want to be walked in on if shares skyrocket.

And that’s the vexing problem with Lucid stock. I call it a two-true outcome trade — either it’s going to strike out or it’s a homerun.

Triangulation Reveals an Intriguing Narrative

If you were to buy and hold LCID stock for a 10-week period, the chances of the position being profitable are extremely limited. We’re talking about an exceedance ratio — whether the stock rises above the starting point — of 27.8%. Nominally, the forward distribution is awful. Assuming a starting price of $5.84, you’re looking at LCID landing between roughly a median price of $4.50 and $6.25.

The saving grace here is the current quantitative sequence. In the past 10 weeks, Lucid stock printed only two up weeks, thereby leading to a downward slope across the period. Under this 2-8-D signal, the 10-week forward distribution shifts positively, potentially landing between $5.30 and $6.30. Notably, the exceedance ratio pops to 60%.

Now, is that enough justification to buy LCID stock? I would hesitate to rely purely on the inductive model above because of the two-true outcome situation. Here, using median pricing calculations is deceptive because Lucid is likely to jump to extreme highs or fall to extreme lows. When you take the median of these extremes, you get the middle value — but this value is really an artifact.

With such robust mobility in LCID stock, you’re not likely to come across the middle value. So, why are sophisticated traders buying far out-the-money (OTM) calls? It probably just comes down to the obvious point: they’re cheap.

Let’s say you bought the 7.00/8.00 bull call spread expiring June 26. If LCID stock rises through the $8 strike at expiration, you earn a maximum payout of roughly 456%. The net debit for this spread is only $18. History has proven that $8 is reachable given how much Lucid moves.

Unfortunately, the opposite is also true: LCID stock is just as liable to falter and land flat on its face. So, what’s interesting here is that the smart money — even when acknowledging the risks — is willing to take the shot.

Ultimately, if you have some stupid money lying around, you could consider a what-the-heck trade. But anything other than that is a ridiculous gamble.

This isn’t to say that PYPL stock has lost its fundamental relevance. Far from it, the underlying business model and various technologies have become standard fare in the modern economy. Unfortunately, PayPal has been rapidly shedding its distinguishing value, with multiple competitors eating up market share in key sectors. To be blunt, the brand is just another label among several.

Primarily, the biggest concern impacting PYPL stock is arguably branded checkout growth, which has weakened materially. This segment is the higher-margin, higher-quality part of PayPal’s business — the classic “Pay with PayPal” button. Growth here has decelerated to around 1% to 2%, which investors interpret as a major red flag.

As mentioned earlier, compounding the woes affecting PYPL stock is the intensified competition. Principally, Apple’s (NASDAQ: AAPL) Pay and Wallet, Stripe, and Klarna (NYSE: KLAR) are squeezing PayPal’s margin. It should be noted that KLAR stock isn’t exactly a top performer, as the fintech specialist has suffered a roughly 48% year-to-date loss.

However, that’s the issue with this payments arena — there’s just no real differentiation. Sure, individual fintechs will wax poetic about their unique value proposition, but let’s be real. For consumers, you tap your phone, push a button, send money and enjoy BNPL (buy now, pay later) financing. Most major platforms (including some native checkout systems from major merchants) broadly do the same thing.

In other words, there’s really no compelling reason to use PayPal (or any other platform) exclusively. Plus, switching among various platforms is a seamless process incentivized through various enticing benefits and programs. Again, PYPL stock is just another solution among several.

Volatility Skew Confirms Hesitation for PYPL Stock

Of course, none of the information cited above is groundbreaking. Since PayPal stock is down 24% YTD, we can reasonably presume that the bad news has been baked into the share price. The big question is whether or not too much pessimism is weighing down PYPL. If it is, a bit of good news could create a disproportionately positive impact.

That’s the basic technical premise behind a contrarian position in PYPL stock, and it makes sense. In the last 10 weeks, PYPL has only printed three up weeks, leading to an overall negative slope across the period. Beyond that near-term point, shares have lost almost 39% of value in the past 52 weeks. As they say in baseball, PayPal could be due.

However, just like our national pastime, superstitions about being due is not a great tactic for consistent success on Wall Street. If all players were owed a big play after an extended slump, we’d never see anyone designated for assignment (basically being demoted from the main team). In reality, we see former studs fade into obscurity all the time.

I’m not suggesting that PYPL stock will collapse. Nevertheless, it’s rather obvious from the volatility skew (for the June 12 expiration date) that smart money traders aren’t willing to lever up on the bull case. Instead, they’re very much protecting against the risk of downside volatility.

By definition, the volatility skew identifies implied volatility (IV) across the strike price spectrum of a given options chain. Since IV reflects the kinetic potential of a security at the affected strike, an elevated reading beyond the normal baseline reflects greater premiums associated with covering against the implied move.

Effectively, the skew represents an insurance market. On any given day for a heavily traded security, the risk is directional: either a sharp move higher or lower. Typically, investors are concerned about covering downside risk unless they’re particularly confident in an upside move. With PYPL stock, the insurance premium is heavily geared toward out-the-money (OTM) puts.

Simply stated, if there is a tail-risk event, the smart money believes it will happen to the downside.

Triangulation of PayPal Stock Reveals Risks

A major risk factor when trading PYPL stock involves its negative bias under a variety of market conditions. For example, if we were to take data from January 2019, a 10-week-long position is statistically likely to go underwater, with an exceedance ratio of only 45.8%. Nominally, if we assume a starting price of $44.41, the expected 10-week distribution would likely land between $43 and $45.50.

Of course, we’re not interested in trading PYPL stock randomly. Instead, we’re looking to trade the security under specific circumstances to see if there is a statistical edge. As mentioned earlier, PYPL in the last 10 weeks printed a 3-7-D sequence (three up weeks, seven down weeks, downward slope). Under this specific scenario, the exceedance ratio is glaringly worse at 35%.

Specifically, out of 40 such sequences printed on a rolling basis since January 2019, PayPal stock has only managed to rise above the starting point 14 times. Further, the expected 10-week distribution would likely place PYPL between $36 and $48. While there is some chance of an upside opportunity, the bulk of the distribution is projected to fall in negative return territory.

The caveat here is that inductive methodologies aren’t perfect and are prone to the black swan risk. Nevertheless, when we triangulate PayPal stock under 3-7-D conditions, PYPL tends to disappoint those seeking a bullish contrarian position. As such, at this moment, I’m more in favor of avoiding the name.

However, those that want to speculate may consider the 45/44 bear put spread expiring June 12. This trade requires PYPL stock to fall through the $44 strike at expiration. If it does, the maximum payout is modest at only a little above 56%.

Here’s the thing, though: the net debit required is only $64 per spread. Also, as the volatility skew demonstrates, we’re probably not looking at a collapse event. It’s just that if a big magnitude move were to occur, the smart money believes that the odds favor collapse as opposed to a rip higher.

With the above bear spread, we would just be looking to snag some profits off a disappointing slide. If that doesn’t sound appealing, PayPal stock might not be a great trading candidate for your needs.

No longer an everything-for-everyone type of enterprise, GE is essentially a pure-play aerospace propulsion and services business. That right there is a massive advantage as the underlying industry has unusually strong long-duration economics. Essentially, GE stock is an investment in a recurring cash-flow machine.

Critically, what keeps the lights on at the company is not just engine sales. Rather, GE is involved in maintenance, repair, overhaul, replacement parts and long-term service agreements. It’s a beautiful arrangement for stakeholders of GE stock. Once an airline buys GE-branded engines, it partially locks itself into the company’s ecosystem for decades. That creates recurring, high-margin aftermarket revenue, leading to impressive financial results.

For example, in last month’s first-quarter disclosure, GE posted earnings per share of $1.86 on revenue of $12.39 billion, easily exceeding analysts’ consensus targets of $1.61 and $10.67 billion, respectively. In the year-ago quarter, EPS landed at $1.49 on revenue of $9.94 billion. These figures aren’t fluky either, with GE stock benefiting from consistent beats on both the top and bottom lines.

Moreover, investors have reasonable expectations that, as the years progress, the bullish case for GE Aero will be even more convincing. Primarily, the company builds engines for the Boeing (NYSE: BA) 737 MAX family and the Airbus (OTCMKTS: EADSY) line. These aircraft represent the most important narrow-body aircraft programs globally, providing tremendous growth potential.

Beyond the expected scale, engine economics should improve favorably for GE stock as fleets age into heavier maintenance cycles. Yes, the security does carry a relatively high premium. Arguably, though, it’s not unjustified given the recurring business trends.

Volatility Skew Signals Some Hesitation Toward GE Stock

With the compelling narratives supporting GE stock, it may seem a bit odd that shares are down roughly 9% on a year-to-date basis. Much of that, of course, is related to the current Iran conflict. With global supply chains at risk, energy prices have been soaring. By logical deduction, that’s not great for the aerospace industry as airlines start scaling back their operations.

However, GE stock does enjoy some mitigating elements to soften the impact of this headwind. From GE’s perspective, the risk comes in the form of flight-hour exposure, since the company’s aftermarket economics depend heavily on planes flying enough hours to catalyze engine wear and maintenance intervals.

Still, the nuance here is that older aircraft may stay in service longer, which forces greater attention on maintenance intensity, overhaul demand and spare parts consumption. Plus, airlines were already having trouble replacing aging fleets, which translates to sustained maintenance business for GE.

If that wasn’t enough, GE does have a defense unit, which facilitates perhaps a cynical benefit amid all the violence. So, GE stock isn’t exactly naked and exposed to a bearish storm — yet the smart money doesn’t seem all that convinced.

If you look at the volatility skew for the July 17 expiration date, you’ll notice that in the options market for GE stock, the net posture is slightly aligned toward downside risk protection. To be clear, the implied volatility (IV) for both calls and puts is relatively flat and linear for strikes near the spot price. Basically, smart money traders don’t anticipate GE shares to rock the boat violently in either direction near the at-the-money (ATM) price.

Instead, the purchasing of insurance is at the tails and predominantly at the left-hand tail. As the strike price zone pivots lower and away from the ATM price, put IV starts rising above call IV. In other words, sophisticated players are willing to pay a premium for extreme downside protection. On the right tail, put IV is also dominant relative to call IV, suggesting a protective posture.

It’s worth pointing out that the smart money isn’t necessarily prescient but rather transactionally sophisticated. Still, with skepticism apparently baked into GE stock, there may be a chance for a contrarian opportunity.

Triangulating a Trade

One of the key tactical advantages of being a GE stock bull is that the security enjoys an upward bias. Using a dataset from January 2019, a random long position held for 10 weeks is likely to generate an exceedance ratio of 61.9%. That means if you were to buy GE simultaneously across a hundred parallel universes, you’d likely be profitable 62 times.

Nominally, the expected forward 10-week distribution would likely place GE stock between $275 and $304. However, the most likely median outcome will probably be somewhere between $285 and $293. Don’t expect to get rich trading GE randomly.

Of course, we’re not interested in rolling the dice for the sake of it. Instead, we’re interested in trading GE stock under specific conditions. In the last 10 weeks, GE printed only three up weeks, leading to an overall downward slope. Under this 3-7-D sequence, the overall exceedance ratio doesn’t really change much.

Still, an interesting point is that the forward distribution benefits from a net positive push in the right direction. Over the next 10 weeks, we would expect GE stock to land between $270 and $320. A major wrinkle is that on July 16, the company will release its Q2 report.

If you’re feeling extra bullish, I’d look into the 300/310 bull call spread expiring July 17. Yes, GE stock would need to rise through the $310 strike at expiration for the trade to be fully profitable. However, this strike falls within the expected 10-week distribution under 3-7-D conditions. Also, a positive earnings report could provide an extra boost.

Should the stars align, you’re looking at a maximum payout of roughly 167%. If you have some spare change for an options wager, GE stock is arguably worth consideration.

Just look at what happened in Palantir’s latest earnings disclosure. For the first quarter, the company posted earnings per share of 33 cents on revenue of $1.63 billion. These figures easily beat out analysts’ expectations for EPS of 27 cents against a top-line expected view of $1.54 billion. However, it’s also fair to point out that robust earnings performances have been par for the course.

Subsequently, on the day of the disclosure, PLTR stock popped higher. Unfortunately, the day after saw a sizable decline in market value. Overall, the results have been unimpressive. In the past month, PLTR incurred an 8.47% loss. On a year-to-date basis, the security is down roughly 25%.

In part, what appears to be happening is a broader sense of diminishing returns. For example, the upcoming Q2 report should show continued financial expansion, with EPS targeted at 33 cents and revenue at $1.81 billion. However, the market is signaling that it’s not enough to ink robust growth metrics. The improvements need to be that much more substantial to satisfy investors, who again are increasingly uncomfortable with the hot premium.

Under this environment, traders need to be more tactical with PLTR stock. You often see these fluff pieces on PLTR stock talking about AI and other narratives — as if this stuff hadn’t already been priced into the security!

It likely has, and the volatility skew is evidence of this.

Hesitation Among the Smart Money Presents an Interesting Case for PLTR Stock

By definition, the volatility skew identifies implied volatility (IV) across the strike price spectrum of a given options chain. Since IV reflects the expected kinetic range of a security at the affected strike price, a higher volatility reading effectively represents greater demand for hedging the implied movement.

Yes, this sounds like a complicated definition — and it is complicated, which is part of the reason why I’m not a big fan of the (deliberately) opaque nature of options education. Basically, the skew represents an insurance market. On any given day, a heavily traded stock would be expected to move either in a net positive or negative direction.

With options, smart money traders can either protect themselves from the risk of a catastrophic loss or they can lever up a speculative bullish position — essentially covering upside risk. In hesitant markets, sophisticated players may end up hedging both sides.

That’s about the situation that’s happening with PLTR stock. For the June 5 expiration date, the dominant expression is geared toward downside protection. You’ll notice that for the lowest out-the-money strike prices, put IV swings sharply northward. This dynamic implies protection against unexpected volatility.

However, the right-side tail is longer, implying careful exposure to upside convexity. Generally, the shape of the skew — especially it being flat for strikes near the spot price — indicates that the smart money doesn’t believe in wild drama for Palantir stock. Still, if something should happen positively, traders don’t want to be caught flat-footed.

An important caveat that needs to be declared is that the smart money isn’t necessarily prescient. Yes, these sophisticated players are buying insurance — but that doesn’t always mean that a car crash is more likely to occur. Right now, even the most seasoned traders don’t know what to exactly make of PLTR stock.

That’s where we can use induction and triangulate a potentially successful transaction.

Playing the Numbers Game with Palantir Stock

One of the tempting reasons why people trade PLTR stock is its high 60-month beta of 1.52. Essentially, this metric tells us that Palantir is considerably more volatile than the benchmark S&P 500. However, this stat is also an aggregate datapoint, meaning that PLTR isn’t always guaranteed to be as volatile as the beta implies. On some days, the volatility could be worse, or it could be muted.

In other words, we’re not interested in trading Palantir stock randomly; instead, we want to trade it deliberately. More to the point, we only want to trade it under conditions and time periods that are favorable to us. Based on the numbers, I believe we are in such a scenario.

In the past 10 weeks, PLTR stock has printed only three up weeks, thereby leading to an overall negative slope. Under this 3-7-D sequence, we would expect the next 10 weeks to create a forward distribution ranging between $120 and $150 (assuming a starting point of $133.99).

Where did this distribution come from? Since PLTR’s public market debut, there have been 17 instances of the 3-7-D signal on a rolling basis. Using an inductive algorithm, we can plot an expected median pathway based on prior observations of this signal.

However, from a sequential week-to-week basis, we would anticipate PLTR stock to be incredibly choppy. Statistically, it’s only within the first three weeks that Palantir has demonstrated a tendency of rising. With prices expected to cluster around $140 at the third week (if the inductive observation is to repeat itself), this price level represents a logical target.

With that in mind, I’m looking at the 138/140 bull call spread expiring June 5. If Palantir stock rises through the $140 strike at expiration, the maximum payout would be roughly 111%. While it’s not the greatest payout by magnitude, you would only be putting a net debit of $95 per spread at risk.

Some might question the near-term expiry, which is understandable. However, having a long expiration date isn’t necessarily safe for a debit-based trade. That’s because the stock in question could easily fall out of the money while you wait for the spread to expire.

No, the inductive methodology used to calculate the trade above isn’t foolproof. But in a non-deterministic system, it’s probably the best tool that we have.

To be clear, I’m not suggesting that Moderna is an irrelevant pharmaceutical enterprise. Far from it, the company enjoys several promising therapeutic pipelines. However, I believe it would be a mistake to bid up the mRNA stock simply on the basis of the hantavirus. When looking at the facts, a mismatch exists between the fear of the virus and the probabilistic risks to the general public.

According to the UN World Health Organization (WHO), the risk of hantavirus spread to the general population is “absolutely low.” Indeed, the threat is a nuanced argument. While the virus has a high mortality rate, the risk of exposure to the average person is extremely limited, in part because of transmission difficulty. The Andes strain that’s in question here requires very close, prolonged contact to jump between people.

In other words, unless you are cleaning out a long-abandoned shed or going on a birding expedition in rural Argentina, your exposure risk is negligible. Better yet, one of the best ways people can help prevent infection is to address rodent infestations. Basic cleanliness and hygiene — along with other common-sense practices — can go a very long way.

That also segues into another concern about buying MRNA stock simply on the basis of a possible hantavirus outbreak — the convenience factor. Because the transmission risk is low to begin with, the preventative measures are convenient. Generally speaking, getting pricked with needles isn’t an enjoyable experience. Therefore, a vaccine may be considered an overkill solution.

Bid Up MRNA Stock? ‘No Thanks’ Says the Smart Money

Obviously, no one knows for sure what the future may hold regarding potential public health crises. And given the fiasco of the global COVID-19 response, it’s understandable that many people are skeptical about the assertions coming from even respected health agencies. That said, it’s interesting that the smart money isn’t biting on Moderna stock.

How do I know? When looking at the volatility skew for the June 18 expiration date, the positioning of implied volatility (IV) readings across the strike price spectrum tells the tale. From the current spot price to the right end of the axis, IV for call options rises in an almost linear fashion. Basically, bullish traders are paying a higher premium than they would be under normal circumstances.

Fundamentally, we’re talking about simple economics here: there’s more demand for call options and thus call sellers are more than happy to collect the exaggerated premium. However, these call sellers are most likely covered call sellers by institutional investors who are long MRNA stock. They believe in Moderna but not in the hantavirus hype.

Subsequently, the smart money is using the premiums to buy protective puts on MRNA stock. You’ll notice that in the volatility skew for June 18, put IV stands above the equivalent call IV. Technically, this dynamic usually occurs when a security is hard to borrow or when there is a high cost of carry. In my assessment, these sophisticated traders are betting that the hanta hype will fade.

It’s also worth pointing out that the put skew for strike prices right below the spot is extremely flat, with the skew only rising sharply on the extremely low end. While it’s impossible to make absolute pronouncements about trader sentiments, this chart signals that the smart money likely doesn’t believe MRNA stock is going to collapse.

Sure, the far out-the-money (OTM) puts are in place in case stuff happens. But the most likely outcome — at least what the institutional folks are showing — is that MRNA stock will soon revert to the mean.

Avoiding the Crowd

Of course, the temptation right now is to buy Moderna stock, especially with how MRNA performed during the height of the COVID pandemic. However, the quantitative landscape doesn’t really look that appetizing for the bulls.

Using a dataset going back to January 2019, the odds that a random 10-week long position in MRNA stock will be profitable are 53.3%. That’s decent, but the aggregate reward would likely be limited. Under random conditions, you’d expect MRNA to land between $52 and $57 (assuming a starting price of $54.35). It’s a bit better than a coin toss, but not by much.

However, when isolating MRNA stock to its current quant signal, the projected outcome delivers a mixed inductive view. In the last 10 weeks, MRNA printed only four up weeks, but with an upward slope. This contrarian signal statistically improves the exceedance ratio to 66.7%, but there’s a major catch.

Under 4-6-U conditions, the forward 10-week distribution of Moderna stock would be expected to range between $40 and $65. However, the bulk of the distribution sits south of the current spot price — and that’s because during the middle portion of the period, MRNA tends to tumble. It’s only in the latter weeks does MRNA pop higher.

Now, we are talking about an inductive observation, meaning that it’s not logically determined that Moderna stock will follow past observed pathways. However, it’s risky to go rogue against the data when the smart money is also hedging for a pullback.

If I had to guess what a viable debit-based trade might be, I’d probably only stretch as far as the 50/48 bear put spread. Actual trading data shows that there would likely be a high concentration of activity around the $48 and $49 price range. However, the maximum payout for this bear spread only tops out at 72.41%.

Personally, I don’t like the risk-reward proposition, and I would really wait for a more confidence-inspiring signal if I’m on the debit side. On the credit side, there’s too much risk of the public money doing “stupid stuff” that could result in unpredictable behavior for MRNA stock.

Yeah, I hate writing wishy-washy articles like this, but for Moderna, the easy money may have already been made. Likely the best idea right now is to avoid taking the bait.

According to data cited by the Kellogg School of Management, consumers predictably traded down in the quality of the goods and services they purchased during the Great Recession. It makes sense because not every household product you buy has to be top of the line. In many cases, a one-dollar can opener works just as fine as a $10 piece from Target (NYSE:TGT).

Unfortunately, that era of direct simplicity — where shoppers can go to Dollar Tree and just expect everything to be a buck (or thereabouts) — is fading. Instead, management has decided to expand its market appeal, which in its mind involves improving product quality. There’s nothing wrong with that, per se. However, when you have built a business around the one-dollar price point, going beyond that realm represents a paradigm shift.

A few bucks here or there may not seem like that big of a deal — and perhaps you’re right. But we’re talking about DLTR stock here, which, as its name suggests, is based on the one-dollar concept. By introducing a multi-price strategy where products are priced at $3, $5, and even $7, you’re no longer operating exclusively on the lowest rung. Instead, you’re playing a game that big-box retailers have been streamlined for.

Now, I can’t say that the strategy doesn’t have any merits. Especially with the uncertainties surrounding the Iran conflict, it’s more important than ever for companies to protect their margins. Sadly, though, when the whole marketing image centers on price, you’re not left with many options.

Why the Smart Money May Be Fearful of DLTR Stock

In the equities market, there’s a common (and not entirely unfounded) assertion that the smart money is simply more prescient than the public retail money. Basically, sophisticated market participants enjoy access to better information — and that information is traded relatively upstream. By the time retail gets the juicy stock tip, the idea has been digested and integrated into the share price.

Still, it’s more accurate to say that the smart money’s positioning provides intriguing intel. And the volatility skew is probably one of the best places to look for this data.

By definition, the skew identifies implied volatility (IV) — or the expectation of movement — across the strike price spectrum of a given options chain. Essentially, this indicator acts as an insurance market. As traders hedge their bets or buy leverage for upside exposure, the skew of calls and puts changes accordingly.

For the June 18 expiration date of DLTR stock, the dominant sentiment appears to be that of downside protection. On the left tail below the current spot price, the IV for far out-the-money (OTM) puts accelerates higher at a noticeably quicker clip than put IV on the right tail (above spot).

Despite the seeming confirmation by the smart money, the core challenge with the volatility skew is that it’s like buying auto insurance. Just because you buy more coverage doesn’t necessarily mean that the chances of getting into an accident rise. The skew represents sentiment structure, not forward probabilities. To extract odds from this screener would be a category error.

In order to understand how DLTR stock may respond looking out, we need to rely on an inductive model.

Using Inductive Probabilities to Trade Dollar Tree Stock

At the core, induction is another term for pattern recognition. Relying on the uniformity of nature, inductive methodologies assume that the future will resemble the past. If you see the same outcome materialize over a number of observed periods, you would naturally expect the same (or similar) outcome the next time around.

Of course, the philosophical caveat to keep in mind is that, in non-deterministic systems, an outcome is not logically deduced. For example, if you see a head-and-shoulders pattern, experience may tell you that the next move is probably bearish, not certainly so. In other words, all inductive methodologies have a chance of incurring the black swan risk.

When it comes to a long-established name like Dollar Tree stock, you can easily calculate the probability of a positive return over a given period by analyzing historical price data. However, we’re not interested in trading DLTR as an aggregate of its long-term performance. Instead, we’re interested in trading the security based on its current signal.

One of the more remarkable events for DLTR stock is that in the last 10 weeks, it has only printed one up week, leading to an overall downward slope. This 1-9-D sequence has only materialized 10 times on a rolling basis since January 2007. Only in four instances did DLTR rise above the starting point 10 weeks later, which suggests that the security may be in a downward spiral.

Even more problematic, the 10-week forward distribution would be expected to land between $85 and $100 (assuming a starting price of $94.05). Probability density would be expected to peak around $92, which doesn’t bode well for those seeking a contrarian bullish position.

As it stands, because the volatility skew is downside-protection dominant, those buying put options will be doing so at a relatively elevated premium. However, I don’t really see a justification for going the opposite direction here. Therefore, aggressive speculators may consider the 90/85 bear put spread expiring June 18.

The idea here is for DLTR stock to fall through the $85 strike at expiration. If it does, the maximum payout is capped at roughly 133%. Breakeven comes in at $87.85, somewhat helping to improve the trade’s probabilistic credibility.

Earlier this year, Carnival reinstated its quarterly dividend of 15 cents per share, with initial payments made on Feb. 27 (to shareholders of record as of Feb. 13). At the time of the announcement, the cruise ship operator reported a record $4.5 billion in operating income, along with an improving balance sheet. This development caused CCL stock to jump higher.

On the consumer front, demand has been incredibly robust despite obvious headwinds, such as geopolitical flashpoints and lingering economic challenges. Perhaps most impressively, nearly 85% of 2026 sailings have already been booked, leaving a smaller amount of inventory available compared to the same period last year. That basically means Carnival has genuine pricing power, positioning CCL stock for future growth.

Still, because of the unique obstacles of 2026, Carnival stock hasn’t exactly benefited consistently from the optimistic news. Mainly, CCL is down 11% on a year-to-date basis, which has absorbed economic concerns related to the Iran conflict. At the same time, it’s also fair to wonder whether the red ink is just a temporary hiccup. Notably, shares are up more than 12% in the trailing month.

Another technical reason to consider keeping the faith in CCL stock despite some choppy waves this year is its efforts to simplify the company’s dual-listed structure (DLC). This unification into a single New York Stock Exchange (NYSE) entity should simplify governance and reduce legal and compliance costs.

It might not entirely move the needle, but S&P 500 trackers and other passive exchange-traded funds may be mathematically forced to increase their weighting on CCL to reflect the larger, unified market capitalization. Further, the decision also allows Carnival to avoid paying for two sets of auditors, thus reducing corporate bloat.

Using a Discrete Inductive Model to Trade CCL Stock

While Carnival’s narrative has certainly pivoted away from the dark days of COVID, the relevant bullish factors discussed are well-known catalysts. Unfortunately, the harsh reality is that if you’re hearing the news from me, the information is downstream. This means that the underlying press release has already been disseminated to the public, and multiple editorials have provided various angles on the topic.

Put simply, I’d be very surprised if the fundamentals above haven’t already been priced into the current CCL stock price. However, there is one area that regular retail traders can receive upstream information — and that’s through discrete inductive models that have to reach mass public adoption.

Let’s begin with the concept of induction, which is a fancy term for pattern recognition. Inductive models seek to better understand the probability of future events via the uniformity of nature, the assumption that future events mimic the past. Why do we believe that the Earth revolves around the Sun? Because we’ve observed this pattern over and over again throughout human history.

Indeed, forecasts about the unknown future are necessarily inductive, including technical analysis. You may ask yourself, why is the head-and-shoulders pattern bearish? Apparently, the original practitioners of the discipline observed multiple heads and shoulders and determined that when this pattern materializes, there are higher odds of a downturn.

That’s an inductive view of the market, but the problem with technical analysis is that the myriad patterns are open to interpretation. You could have two analysts look at the same chart and come up with five different conclusions. Essentially, technical analysis lacks an arbiter to officially determine what the patterns are, creating vast debates.

To get around this dilemma, I use a discretized model where the input is not a scalar signal (share price) but a discrete one. While this doesn’t eliminate criticisms of the inductive philosophy itself, it does at least create an arbiter for the inputs.

In my analysis, I view the equities world through a Markovian lens; that is, forward probabilities depend largely on the current state of the system. I define a state as a 10-week snapshot of weekly candlesticks. Therefore, to find what the forward distribution might be for the future state (the next 10 weeks), we need to consider what the current state (the last 10 weeks) is.

Identifying a Tempting Trade for Carnival Stock

Using a dataset going back to January 2019, a random long position in CCL stock held for any 10-week period is likely to generate a neutral to slightly bullish bias. This pensiveness is to be expected given the disparate economic and competitive cycles that Carnival had to navigate over the past few years. Specifically, out of 362 rolling 10-week sequences, 182 of them (at the end of the period) rose above the starting point.

Basically, we’re looking at an exceedance ratio of 50.3%, which is not anything to write home about. If you were to bet on CCL stock simultaneously across 100 parallel universes, you’d statistically only come out a winner 50 times. Further, the forward 10-week distribution isn’t all that great, landing between $26.90 and $27.50 (assuming a starting price of $27.17, Friday’s close).

However, we’re not interested in trading Carnival stock based on its aggregate but rather under the specific condition of its current state. In the last 10 weeks, CCL stock printed only three up weeks, leading to an overall downward slope. This 3-7-D signal statistically has a different forward distribution, with the exceedance ratio soaring to 71%.

Now, it must be stated that we’re talking about small sample sizes here. Nevertheless, it does appear that under 3-7-D conditions, buy-the-dip sentiments dominate the discourse. Moreover, the anticipated forward distribution would likely place Carnival stock between $24 and $34, with probability density peaking between roughly $28 and $30.

While it’s a risky proposition, I’m very tempted by the 29/30 bull call spread expiring June 18. For a net debit of $38 per spread, traders are hoping for CCL stock to rise through the $30 strike at expiration. If so, the maximum payout would be $62 or just over 163%.

Now, a word to the wise: just because the earth has been observed to revolve around the sun does not mean that this orbital pattern is logically necessary; it’s a contingent fact about our universe. In other words, there is no purely logical justification for the principle of the uniformity of nature.

Of course, that’s absolutely the case with the wild equities and options markets. However, with the observed disparity in performance relative to baseline, aggressive speculators may have a rational case for considering the 29/30 bull spread.

It’s not so much that there’s something inherently problematic about this signal in the abstract. Statistically, though, this pattern is extremely rare, having only materialized a handful of times over the last several years. What’s more, when this signal flashes, the end result tends to be negative for the SPY.

And so far, that’s exactly what we’re seeing. Since the close of March 4, the benchmark ETF has lost roughly 2.5%. The significance here is not so much about the raw performance loss but the overall trend. Due to the rising inferno stemming from the Iran war and its implications for global economic stability, the SPY could be the canary in the coal mine.

Still, not all sectors may be due for a steep correction. If I had to be bullish on a sector right now, I’d take a long look at cybersecurity, especially names like Cloudflare. Headquartered in San Francisco, California, Cloudflare provides a range of internet services, including content delivery network services and cloud cybersecurity.

Fundamentally, these specialties should see rising relevance given Iran’s cybersecurity capabilities. Also, the Iranian strategy isn’t focused on mano-a-mano warfare but rather asymmetric attacks. The bottom line is that no country is going to attack the U.S. head-on. Instead, the point here is to make the war economically unsustainable for the Americans.

That puts U.S. business interests at great risk of cyberattacks, driving relevance for NET stock. Not only that, it appears the smart money has the same idea.

Volatility Skew Goes Bimodal for NET Stock

Easily one of the most important options-related screeners to consider is volatility skew. By definition, the skew identifies implied volatility (IV) — or a stock’s potential range of motion — across the strike price spectrum of a given options chain. In effect, the screener showcases the surface-area distortion of volatility space, allowing retail traders to understand the smart money’s risk positioning.

If you think about it this way, if sentiment were perfectly neutral for NET stock, the skew would be completely flat. However, the market for popular securities is never like that. Most market participants — especially institutional investors — are worried about downside movements. As such, they may buy put options, which act as an insurance product against corrections.

On the flipside, other participants are worried about missing upside opportunities. In that case, you will likely see traders pay a heftier premium for call options. In turn, the skew on the right-hand side (toward higher strike prices) may rise, suggesting that the smart money is positioning for upside convexity.

What makes NET stock rather unique is that its skew is bimodal. From the starting gun, put IV rises higher and higher toward the left-hand side (toward lower strikes). This setup indicates a prioritization of mitigating downside volatility. However, on the other end, call IV also rises toward the right-hand side. Here, the structure suggests that traders simultaneously don’t want to miss out on any rallies.

It’s worth reminding ourselves that the smart money isn’t smart because it’s prescient. This skew reflects the point. It’s obvious that even the most sophisticated players are unsure of where NET stock may head next. But despite the volatility concerns, these folks also don’t want to miss out on a potential sustained rally.

Using the Inductive Approach to Trade Cloudflare Stock

While the smart money may not know where NET stock may go next (hence the bimodal skew), a nagging question remains: is there a way to deduce this information? From a purely mathematical sense, the answer is no. Nothing about the current state of affairs necessarily compels a future outcome. However, what we can do is to reasonably infer an outcome.

Essentially, we’re going to rely on pattern recognition. Here’s the deal. In the past 10 weeks, Cloudflare stock printed only four up weeks, but the overall slope was positive. This market structure creates a rare 4-6-U sequence. As alluded to earlier, there’s nothing special in the abstract about this sequence. However, it’s a distinct signal — and statistically, this setup should yield a distinct distribution.

It’s just like baseball. For many players, the batting average fluctuates depending on whether there are runners in scoring position. Some players simply rise to the occasion and their situational batting average reflects this reality. It’s the same principle (I believe) in the equities market.

Under 4-6-U conditions, NET stock would have a tendency to land between $175 and $262. To be fair, probability density is expected to peak at around $218 on a median basis. However, this data encompasses an approximation from all examples of the 4-6-U sequence. Fundamentally, I speculate that the current circumstance of the Iran war offers an unusual catalyst.

We’re facing a potential paradigm-shifting event that could impose long-standing economic consequences. Further, U.S. business interests will be prime targets for Iranian asymmetric attacks. Given this framework, I don’t think adding some Kentucky windage is a bad idea.

Identifying a Specific Trading Idea

For aggressive speculators, the one idea that I find appealing is the 240/250 bull call spread expiring May 15. This wager requires NET stock to rise through the $250 strike at expiration to be fully profitable. If it does, the maximum payout (at time of writing) comes out to nearly 120%. Breakeven lands at $244.55, helping to somewhat improve probabilistic credibility.

There’s no doubt that this trade features a thin wing, meaning that the window of profitability is narrow. In order for this trade to work, we would be aiming for the security’s high point (which flashed on Halloween). While an aggressive target, the combo of fundamental and quantitative evidence arguably makes NET stock intriguing.

There will undoubtedly be twists and turns to this story. However, as investors, it’s time to start thinking about what opportunities might be available if Greenland becomes part of the United States.  

But First, Why Greenland?  

The issues involving the United States interest in annexing Greenland are multifaceted. A deep dive is better left to people who have more knowledge of the issues. However, on a high level, Greenland has vast, untapped reserves of critical minerals, including rare earth elements (REEs), that are needed for many of the current advanced technologies, including those having to do with the defense industry.  

Critical Metals 

Critical Metals (NASDAQ: CRML) is a rare earth play that is up over 150% in the first two weeks of 2026. The stock isn’t climbing for fundamental reasons. The mining company is still in the exploratory stage, so it is not profitable and has no revenue. This is a buy-the-headline event. 

In this case, Critical Metals has received the go-ahead to begin construction of its Tanbreez rare-earth project in Greenland. This comes at approximately the same time that the company announced plans for a joint venture with Saudi Arabia that will create a $1.5 billion rare earth mineral processing facility in the kingdom.  

Energy Fuels 

Energy Fuels Inc. (NYSEAMERICAN: UUUU) is a company that is largely known for its uranium production. However, the company is leveraging existing U.S. infrastructure to move beyond being just a uranium producer, building out rare earth separation capabilities. This gives investors a pure‑play on the policy push to rebuild Western nuclear and critical minerals supply chains.  

Management has outlined a path to commercial heavy rare earth oxide production by around 2026, backed by roughly $900 million in available capital to fund the build‑out. That timeline aligns with U.S. Department of Energy initiatives to end reliance on Russian nuclear fuel and expand domestic enrichment and processing capacity, effectively pulling forward demand visibility for politically favored suppliers.  

By focusing on processing and separation rather than only greenfield mining, the company aims to sit in the highest‑value part of the supply chain where federal incentives and strategic offtake agreements are likely to concentrate. Still, investors should be mindful that the company isn’t yet profitable.  

MP Materials

MP Materials (NYSE: MP) gives investors direct leverage to the U.S. rare earth magnet story, anchored by its Mountain Pass operation in California, one of the only scaled rare earth mines and processors outside China. As Washington broadens its definition of “critical minerals” and shifts funding toward high‑risk supply chains, rare earth producers with proven assets and processing capabilities are positioned to benefit disproportionately.  

The U.S. is moving from viewing rare earths as a niche EV and wind story to recognizing them as foundational for defense, automation, and advanced manufacturing. Permanent magnets made from neodymium‑iron‑boron and related materials are essential for precision‑guided munitions, drones, radar, and other systems that sit at the center of rising defense budgets.  

Investors should watch how MP executes downstream integration into magnet production, where margins and strategic value are highest. As the government seeks to tilt contracts and incentives toward domestic supply, a scaled U.S. mine‑to‑magnet platform could become a core node in the Western critical minerals’ ecosystem, with demand tied to both electrification and rearmament.  

Lockheed Martin  

Lockheed Martin (NYSE: LMT) remains one of the most direct ways to express a view that defense spending is entering a structurally higher range as geopolitical risk rises and NATO moves toward more ambitious spending targets. Programs like the F‑35, missile defense systems, and advanced munitions give the company durable, multi‑decade cash flows that tend to grow when policymakers prioritize deterrence and replenishment of depleted stockpiles.  

With the U.S. defense budget projected to push above $1 trillion in fiscal 2026, and additional reconciliation funding under discussion, primes like Lockheed are likely to see growing order books across air, missile, and space platforms. The Pentagon has already highlighted the need to sharply increase production of missiles and drones, areas where Lockheed’s existing capacity and technology base offer a competitive edge.  

For investors, the key lens is backlog and visibility. As NATO partners accelerate their own procurement to meet higher GDP‑based targets, international orders can complement U.S. demand, supporting a defensive earnings profile that tends to hold up better through economic cycles.  

RTX Corporation 

RTX (NYSE: RTX) formed from the merger of United Technologies and Raytheon, provides a diversified play on both commercial aerospace recovery and rising global defense outlays. The company’s Collins Aerospace and Pratt & Whitney segments tie RTX to long‑cycle engine and avionics demand, while the Raytheon business gives it exposure to missiles, missile defense, radar, and secure communications that sit at the heart of modern conflict.  

RTX has been growing revenue while expanding its backlog, with recent quarters showing sales in the low‑ to mid‑$80 billion range annually and a backlog that has climbed into the mid‑$200 billion zone. That order book provides multiyear visibility as NATO partners and the U.S. simultaneously replace depleted inventories and invest in next‑generation air and missile defense systems.  

From a financial standpoint, RTX has returned to solid profitability with normalized return on equity in the low‑teens and a dividend yield that, while modest, has room to grow as free cash flow improves. With a beta below 1 and a mix of commercial and defense cash flows, the stock offers a relatively balanced way to participate in both the aerospace upcycle and the rearmament trend.  

Why These Themes Converge

Taken together, CRML, UUUU, MP, LMT, and RTX sit at the junction of three secular forces: critical mineral security, nuclear and electrification tailwinds, and a sustained upshift in global defense spending. Policymakers are signaling that they are willing to commit hundreds of billions of dollars over the coming decade to reduce reliance on Russia and China for nuclear fuel, rare earths, and advanced military hardware, effectively underwriting demand for aligned suppliers.