Buying In-the-Money Calls Is a Good Strategy
Tonight's short squeeze in CPU concept stocks was spectacular — AMD hit a trillion-dollar market cap intraday, and Pelosi's ITM call position rose 23% $INTC 20270319 50.0 CALL$ .
The reasons behind this squeeze are complex: various delayed industry catalysts finally fermented — like the Meta App Store ranking news we'd been talking about all last week, which only exploded today, and then the C-end application surge, which in turn benefited chips; the crude oil plunge cooled inflation expectations;
Of course, the most important factor was the positioning of the chips. The expectation of a late-September pullback was so deeply ingrained that last week saw a pile of Sell Call openings at 110, 120, and 125, and apparently even a large 130 Sell Call block.
The squeeze hit 115 at the open. I expected the 110 and 115 Sell Calls to be forced to close and then a pullback — but I didn't expect it to charge straight to 125. That kind of momentum suggests some people got squeezed out and rolled to 125 and 130.
Speaking of which, this kind of short squeeze has been commonplace this year. If you miss the boat because you're afraid of a macro-driven pullback, the cost of getting back on becomes extremely high.
Looking back at last week, it was all bad news — Anthropic's CEO even jumped out to stoke panic and dig a fake hole. Large block monitoring found VIX Buy Call blocks every single day, in the tens of millions of dollars — absolutely relentless in trying to scare people off. In that environment, not shorting was already an achievement — who would dare go all in?
Of course, paying extra attention to put openings reveals something interesting: although the front-row strikes are all below 100, there are many put openings at the 115 strike in the back rows. Normally, genuine bearish positioning wouldn't have put strikes above the stock price. So keep an eye out for this pattern in the future.
In short, the lesson from this experience is: no matter when, always maintain exposure to the names you believe in.
If you missed the boat on Intel and AMD, no worries — there's still storage. Storage is the bottleneck, and when it's not this sector's turn to rally, that's the best time to get on board.
No need to mention holding the stock outright — for buying calls, you can learn from Pelosi and buy deep ITM, so even if it doesn't rally, you can take assignment. For Sell Put strategies, considering we're in a bull market, you can even choose at-the-money strikes $MU 20261002 950.0 PUT$ $SKHY 20261002 170.0 PUT$.
MSTR also got squeezed tonight. Last week, institutions put on a 150–155 Sell Call spread, and it likewise got crushed by the squeeze.
On a pullback, you can sell puts$MSTR 20261002 140.0 PUT$ . Of course, for this kind of market action, a Sell Put strategy might be a bit too tame.
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