CELH trade ideas
How To Make Money With No Overall Market RiskToday I'm going to talk a bit about relative value trading, something that almost nobody on this site is familiar with. The best way to learn about it is by running through an example.
I've been watching this trade for a long time, and it's finally starting to perk its head up again. CELH is an awesome, high rev growth and high margin business in the beverage industry that I really want to be long with no market risk. In order to get long this stock while eliminating my exposure to the overall market, I'm going to short another company in order to reduce my market correlation.
W is one of the worst internet retailers around. They will likely never make a profit, and they have run up 800% run due to high revenue growth from covid that likely won't last. One of my friends works across from their office, and prior to the pandemic he told me that employees had to line up outside work for an hour so they could get scanned in properly. But that's besides the point. The stock is massively overextended, and the company just had negative press over the weekend involving child trafficking, which is a very sensitive issue & an additional headwind + reputation risk.
By combining these two trades in the correct proportions (beta hedging), I will not only look to generate alpha from each side leg of the trade, but I will also do so without being exposed to market correlation. The performance of this trade is entirely up to the sector risk that these companies operate in, and the business models and execution of the management. This type of trading is also called "relative value", and it's what a lot of long/short professional hedge funds do. Think about how you can begin to hedge your risks while making money on your insurance!
Cheers
Celsius will probably have a retracement towards $5I am generally long on this stock. However, we are seeing an upward tilted broadening wedge pattern form on CELSIUS HOLDINGS INC. The bottom of the wedge is broken and so it is likely that price will eventually return to the low point of the formation.
$CELH A Buy Above $5$CELH is on the verge of a breakout this morning. A buy stop at $5.01 will really get this stock moving and the shorts scrambling to cover.
About $CELH
Celsius Holdings, Inc., founded in April 2004, is a global company with a proprietary, clinically proven formula for its brand CELSIUS®. Celsius Holdings, Inc. has a corporate mission to become the global leader of a branded portfolio consisting of proprietary, clinically proven innovations which offer significant health benefits. CELSIUS®' Original Line comes in nine delicious sparkling and non-carbonated flavors in sleek 12oz cans and is also available in single-serve powdered packets. CELSIUS®' Stevia Line is available in five refreshing flavors and the line is naturally caffeinated and naturally sweetened.
As always, use protective stops. This trade won't need much.
Good luck to all!
