Proflex All-Access Update: Holding Through the Margin-Call Selloff

Hey Reader,

The last few sessions have been rough across the AI trade, and we want to walk you through what is driving it, what our plan is, and why we are holding every position in the book.

TL;DR: The market is overreacting. This selloff is mostly forced selling from margin calls, not a change in the AI story. AI valuations are cheap here and we are holding our positions.

What Is Happening

Most of this move is leverage coming out of the market. When prices drop, margin calls hit. Leveraged accounts are forced to sell whatever they hold to meet them, and that selling pushes prices lower, which sets off the next round of calls.

That is mechanical selling, not investors changing their view on the businesses. It hits the most liquid and most crowded names hardest, which is exactly why the AI leaders are taking the brunt of it.

We have not seen anything in the fundamentals that changes the story. What has changed is the price. The froth coming off in terms of leverage makes these names more attractive, not less.

Key Point: Valuations in the AI trade are very cheap against where earnings are headed. The market is overreacting to forced selling.

Positions We Are Holding

Puts:

• Nvidia (NVDA) $210 Nov 20 Put
• SpaceX (SPCX) $140 Nov 20 Put
• Alphabet (GOOG) $330 Nov 20 Put
• Alphabet (GOOG) $280 Nov 20 Put
• Broadcom (AVGO) $390 Nov 20 Put
• Micron (MU) $870 Dec 18 Put
• Gold Miners (GDX) $93 Nov 20 Put

Covered calls:

• Tesla (TSLA) $405 Dec 18 Call
• Nike (NKE) $40 Jan 15 '27 Call

Both covered calls are well clear of their strikes. Several of the puts are below strike right now, and that is expected in a forced-selling flush. We are not booking losses into a move driven by margin calls.

Our Approach Going Forward

We are holding every position. As the Nov 20 expiry gets closer, we will look to roll out in time for a credit where needed and keep collecting premium while prices recover.

Margin-call selling overshoots in both directions, so short-term moves are hard to nail. We are not trying to call the exact bottom. Our focus is holding quality positions and adding allocation when we see value, and right now we see value.

Alert: If you are under-allocated, this is a good zone to add. Please keep your rating allocations in check and avoid using margin yourself in a tape like this.

We'll keep you updated in real time as this develops.

Stay sharp.

— The Proflex Team