Howard comes to the table with his homework from last week - picking 15 stocks to build his portfolio around, selecting ten stocks on the long side and 3 stock on the short side. The longs include: AMZN, SPOT, CRM, AAPL, and GOOGL among others. On the short side, he is interested in FB, CMCSA, and SBUX. From the neutral side he selects XOM and T.
Tom then explains the basics of correlation and beta to show how Howard’s basket of stocks would perform if the overall market went up or down. Since some of these stocks are high priced, Tom suggests using options on AMZN and GOOGL to simulate the same exposure while using much less capital.
Friday, they will start building their watchlist and place a couple of trades in these underlyings.
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