SMCI to be Added to the S&P 500

And why you should reconsider blindly buying beforehand!

We looked at 5 years of stocks being added to the S&P 500 (roughly 68 stocks).

When the stock SMCI joins the S&P 500 in the first quarter of March, historical data suggests that the average move one month before the addition is 6.1%, contrasting with the 0.4% average move after. The median move is 3.6% before compared to 1.5% after, while the standard deviation shows a decrease from 15.2% to 10.6%.

Below are histograms depicting the results before the stock was added to the S&P 500 as compared to after the addition.

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Two Trade Ideas

ADBE Iron Condor

ADBE reports earnings on March 14, right before the March monthly expiration. It's come down from highs, and has bounce between 500-600 for the better part of a year. If you think that might continue - an iron condor short the 490/480 put spread and the 600/610 call spread trades at around $2.90 credit, roughly 1/3rd the width of the strikes with a 65% probability of profit.

AAPL Call Diagonal (MAY/APR)

AAPL has given up almost a year's gains in just over a month. Is this a changing of the guard? If you think its a bit overdone, a call diagonal is a cheap way to get some long delta and positive gamma. Long the MAY 175 call, and selling the 180 April call, nets around 17 long delta for just a $3.76 debit.

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