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  • Writer's pictureGeorge Kailas

Prospero.Ai 12/11/22 Newsletter

Net Options Sentiment guidance got us a 90.64% gain on QQQ options and 18.70% on JHG.

Welcome to the 13th edition of the Prospero newsletter. You are receiving this if you signed up for our app or subscribed on Substack.

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Confused by any terms? Click our glossary help file. If you are still confused after, email and we will add something to clarify. The first mention of a signal unique to our platform we will link to the help file IE Net Options Sentiment.

Used our bearish guidance level for a 90.64% profit on QQQ options

From our 12/4 letterQQQ and SPY Net Options Sentiment Bullish above 40 and Bearish below 20” both quickly moved below these warning levels on 12/5, representing a strong signal that price on both would decline.

These steep declines in Net Options Sentiment provided a decisive signal to enter a put position. In addition, the rise in QQQ Net Options Sentiment on 12/7 helped us time our exit well for a 90.64% gain before the price rose on 12/8.

In review - 18.70% gain on put options - Interesting Mover (Bear potential) - JHG (Janus Henderson Group plc)

From our 12/4 letter “Expect a down week if: JHG Net Options Sentiment < 35. SPY Net Options Sentiment < 20. (Risk factor - JHG Social Sentiment > 50)” Not only did Net Options Sentiment on SPY provide a great indication the market would decline but JHG also moved below the warning level early 12/5.

The combination of low Net Options Sentiment for JHG and fast falling SPY Net Options sentiment gave us the entry point signal for our put options and also a clear indication of the exit timing. JHG Net Options Sentiment moved up sharply on 12/9 and we got out at a 18.70% gain.

In review - Interesting Mover (Bull potential) - UNH (UnitedHealth Group Inc)

From our 12/4 letterExpect an up week if: UNH Net Options Sentiment > 60. SPY Net Options Sentiment > 30. (Risk factor - UNH Upside Breakout < 88)” We did not enter a trade on this stock because of the bearish SPY movement but it did beat the market this week with a 1.45% gain vs. -2.62% for the benchmark SPY.

We continue to like UNH if the market turns around. Excellent Upside Breakout (94) and Profitability (90) make it a good choice.

Expect an up week if: UNH Net Options Sentiment > 65. SPY Net Options Sentiment > 25. (Risk factor - UNH Upside Breakout < 88)

The large and sustained decline in SPY Net Options Sentiment this week has us feeling more bearish and this is one of our favorite filters for a bear market.

These stocks all have more bearish bets against them in the options markets both short (Net Options Sentiment) and long term (Downside Breakout). The lower Profitability adds a layer of additional downward price pressure as we move closer to a potential recession.

Bear potential - TTM (Tata Motors Limited ADR)

Low Profitability and Net Options Sentiment combined with high Downside Breakout make this a prime candidate for poor performance in a bearish week. In better markets the above average Growth projection rating of 63 would be a bigger risk factor but Growth stocks have performed poorly for the last ~year.

Expect a down week if: TTM Net Options Sentiment < 25. SPY Net Options Sentiment < 15. (Risk factor - TTM Social Sentiment > 80)

If you are a newer reader, last week we compiled a list of our best calls to show the power of our signals and research.

Thanks for reading and have a great week!

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