Cherry Picks

Tom Sosnoff's Portfolio Update and Two Trade Ideas

By:Michael "Dr. Data" Rechenthin

Here’s the thinking behind a noted investor’s choices

Tom Sosnoff Trades

We asked Tom Sosnoff, aka “El Sos Grande" for his portfolio. This is what he said:

Tom Sosnoff

Long positions

  • Alibaba (BABA)
  • DocuSign (DOCU)
  • Japanese yen futures (/6J)
  • 30-Year U.S. Treasury bond futures (/ZB)
  • Lyft (LYFT)

Short positions

  • Microsoft (MSFT)
  • Nasdaq ETF (QQQ)

Pairs positions

  • Long on the Russell 2000 futures (/RTY) and short on the NASDAQ 100 futures (/NQ). This trade is a bet that the small-cap companies in the Russell 2000 will outperform the tech-heavy Nasdaq-100.
  • Long Alibaba (BABA) against a short position in Baidu (BIDU). He’s speculating that Alibaba will outperform Baidu.
  • Long Lyft (LYFT) with a corresponding short position in Uber (UBER).

Delta-neutral positions

Delta neutral typically means he has balanced his position to be insensitive to small movements in the stock price. Instead, he is aiming to profit from volatility or time decay instead of a directional move in the stock.

  • Russell 2000 ETF (IWM)
  • Advanced Micro Devices (AMD)
  • Crude oil futures (/CL)
  • Costco (COST)

Two Trade Ideas

TLT January 2024 call ZEBRA (Bullish)

Sosnoff caught the move in bonds over the last last month—rates normalizing along the curve with the two-Year yield at roughly 4.71% and the 10-Year at 4.39%. If you think rates might continue to come down, a long delta TLT position is a cost-effective way to play it. A zero extrinsic value back ratio (ZEBRA) trade sets up with close to 85 delta at a cost of around $5.20, long 2x the 89 strike calls and short 1x the 92 strike calls in the January monthly expiration.

TLT Zebra

QQQ (Dec./Jan.) put diagonal spread (bearish)

The rally in the Nasdaq has been swift—more than 10% from the low in November. While seasonality is typically strong to the upside into year end, if you think the move might be a bit overdone, a December/January put diagonal spread is a cheap way to get some short delta. Long the Jan2024 385 strike put, with a short Dec15 377 Put, nets around -22 short delta with some positive gamma for a $5.15 debit.

QQQ Diagonal

Michael Rechenthin, Ph.D., (aka “Dr. Data”), managing director of research and development, has 25 years of trading and markets experience. He is best known for his weekly Cherry Picks newsletter. On Thursdays, he appears on Trades from the Research Team LIVE. 

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