Top Pick Tuesdays – c3.ai Inc

C3 AI Inc (AI:NYSE)
Price at Preparation: $24.12 (Feb 5, 2024)

What they do

In the rapidly evolving landscape of technology, Artificial Intelligence (AI:NYSE) stands out as a beacon of transformative potential. As enthusiasts and believers in the boundless possibilities of AI, we’ve been closely monitoring the market for opportunities that align with our bullish outlook. However, navigating this terrain requires more than just optimism; it demands a strategic approach grounded in careful analysis and risk management. Today, we’re excited to share our latest find, a gem that we believe is poised for significant growth.

After extensive research and market observation, we’ve identified a point where our enthusiasm for AI meets an irresistible market opportunity. The sweet spot? A pricing threshold that screams ‘buy’ for those looking at the long-term horizon. We believe that an entry price of $30 or less for AI-focused investments presents a well-measured long-term risk-reward (R/R) play that’s too good to pass up.

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Let’s break down the numbers and the logic. Writing puts at a $20 strike price for a premium of $1.30, which reduces our potential entry cost to $18.70 per share, should the options be assigned. This cost basis is, in our view, “bonkers” — an incredibly low price for a stake in the future of technology. It’s a play that leverages current market undervaluations, offering a backdoor into AI investments at a discount. 

Moreover, the 75-day timeframe gives us ample room to navigate and observe market trends, ensuring that our investment move is not just reactive but proactive. We’re not just betting on AI; we’re positioning ourselves to benefit from its growth trajectory in a measured, strategic manner.

Plan – Writing puts with Precision

Our approach is both methodical and bold. We’ve decided to write 5 puts on a leading AI stock, targeting a strike price of $20, set 75 days out. Why this specific strategy? Writing puts allows us to potentially enter the stock at an even more attractive price or, alternatively, pocket the premium if the stock stays above our strike price. The premium we’re aiming for is $1.30 on the bid (OB), a lucrative credit that enhances our position right from the start. 

By confirming our orders at these levels, we’re setting the stage for a strategic entry into the AI market. This isn’t just a shot in the dark; it’s a calculated move based on our bullish outlook and a thorough analysis of market conditions. 

Next Steps: keeping our eyes on the prize

As our orders are confirmed, we’re not just sitting back and waiting. Our team will continue to monitor the market, ready to adjust our strategy as needed. We understand that the AI landscape is dynamic, with new developments and data points emerging regularly. Our commitment is to stay informed, agile, and aligned with our long-term vision of capitalizing on AI’s potential. 

Let’s go deeper into the nuances of our investment strategy, particularly focusing on the significance of key holdovers and the strategic use of LEAPS. This approach not only solidifies our bullish stance on AI but also showcases our commitment to leveraging every available tool to optimize our investment in the sector.

Diving deeper: mastering the ai market with precision and strategy

The Significance of Key Holdovers

In our journey through the AI investment landscape, we’ve identified crucial holdover points at $23.24 and $20.52. These figures aren’t just random numbers; they represent strategic benchmarks in our investment playbook. A holdover point is essentially a price level that, if surpassed, can significantly alter the risk-reward ratio of an investment. For us, these levels act as indicators for potential action—whether it’s doubling down on our position or reevaluating our strategy based on market dynamics. 

The beauty of identifying these holdovers lies in their ability to guide our short-term maneuvers without losing sight of our long-term objectives. By keeping a close eye on these levels, we can navigate the volatile waters of the AI market with more confidence, ensuring that our investment moves are both calculated and timely. 

Leveraging Generic Assignment for Superior Returns

Our strategy to write puts at a $20 strike price, aiming for a premium of $1.30, sets us up for a potential cost basis of $18.70 on assignment. However, we’re not just stopping there. By applying a bit of “stink” on it—slang for aggressively seeking to improve our position—we’re exploring ways to use possible alpha flow to further lower our entry price. This could involve adjusting our bid based on market movements or leveraging additional options strategies to enhance our position. 

The concept of “putting some stink on it” is about being proactive and creative in managing our investments. It’s not enough to simply set a strategy and wait; we’re constantly looking for edges to improve our cost basis and, by extension, our potential returns. 

The Strategic Use of LEAPS for Long-Term Advantage

Looking ahead, we’re excited about the prospects of incorporating Long-Term Equity Anticipation Securities (LEAPS) into our AI investment strategy. LEAPS are essentially options contracts with expiration dates longer than one year, offering a way to gain long-term exposure to stock movements at a fraction of the cost of owning the stock outright. 

I personally am a big fan of LEAPS for several reasons. They provide a way to leverage our bullish outlook on AI over a longer horizon, allowing us to benefit from potential growth while managing our upfront investment. Moreover, LEAPS can be used to generate additional income through strategies like covered calls or to hedge against potential downturns in our portfolio.

What’s Next: A Dynamic Approach to AI Investing

As we continue to refine our investment strategy in the AI sector, our focus remains on being dynamic and responsive to market conditions. The use of key holdovers, strategic assignments, and innovative tools like LEAPS are all part of our broader commitment to not just participate in the AI revolution but to lead within it. 

We’re not just investors; we’re strategists, constantly seeking ways to optimize our positions and capitalize on the transformative potential of AI. As the market evolves, so will our approaches. We invite you to stay engaged, stay informed, and join us in this exciting journey toward unlocking the full potential of AI investments. 

Conclusion: The Ai Investment Odyssey Continues

Our bullish stance on AI is more than just optimism; it’s a reflection of our belief in the power of strategic investment to generate substantial returns. By combining a deep understanding of the market with innovative investment techniques, we’re positioning ourselves—and our followers—for success in the high-stakes world of AI investing. 

Stay tuned for more updates, insights, and strategies as we navigate the ever-changing landscape of AI. Together, we’re not just watching the future unfold; we’re actively shaping it. 

This expanded post further details our investment strategy, emphasizing the importance of adaptability, strategic planning, and the use of sophisticated investment tools. By diving deeper into the mechanics of our approach, we aim to empower our readers with the knowledge and insights needed to make informed decisions in the dynamic AI market.

Disclaimer: This article is for informational and educational purposes only, not investment advice. We recommend researching and consulting with a financial advisor before making investment decisions. All actions based on this information are at your own risk.

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