Each of the ideas that I’m going to discuss all feature underlying narratives that help explain where they ended up heading into the weekend. Rehashing those talking points would be rather useless.

I’m not being fatalistic but rather realistic. A few years ago, the earliest generative AI engines suffered from consistent hallucinations and other productivity headwinds, effectively serving as the digital gremlin that gave the proletariat an extended lifeline. But with hallucinations rapidly evaporating into the ionosphere, we have to face a new reality — AI can kick our hind ends.

What would take a CFA a day or two to compile ChatGPT can spit out in mere seconds. Some might be worried about the financial publication industry and the fact of the matter is that we all should be. If the core functionality of the CFA can be replaced, what does that say about everyone else?

With that said, generative AI more or less operates in a linear fashion. It lacks the intellectual subversion of humans and that’s where we come in. We’re not going to play the game we’re destined to lose. No, we’re going to play the only game where we have a chance to win.

You see, the fundamental mistake that the finpub industry is making is chasing value. That’s an open-ended question with infinite answers. It’s akin to asking investors how much a certain stock should be priced at — this leads to endless debates and unfalsifiable assertions.

Instead, we should seek worth, as in, is that particular stock worth your time (money)? That’s a yes-or-no question. And the answers are incredibly easy to categorize.

Sure, compressing price action into a binary code may seem ridiculous — until you realize that this very code can be integrated into Bernoulli trials. From there, we can understand the probabilistic nature of the securities we’re targeting, only acting when the odds favor us and simply avoiding when they don’t.

Welcome to applied game theory.

CommVault Systems (CVLT)

A cyber resilience and data protection software company, CommVault Systems (CVLT) suffered a rough week. On Friday, CVLT stock dropped nearly 1%, bringing its trailing-five-day loss to 4%. Even worse, in the trailing month, the security is down more than 5%. While circumstances may be ugly right now, the red ink could open an opportunity for risk-tolerant speculators.

In the past two months, CVLT stock has printed a 4-6-D sequence: four up weeks, six down weeks, with a negative trajectory across the 10-week period. Think of this sequence as a voting record. During the past 10 weeks, the market voted to buy CVLT four times and voted to sell six times. We’re not interested in how much it likes CommVault or whether it attended the rallies — we’re just counting the votes.

From observing past analogs, we know that since January 2019, the 4-6-D sequence has materialized 35 times. Enticingly, in 71.43% of cases, the following week’s price action results in upside, with a median return of 3.07%. Should the bulls maintain control of the market for a third week, investors may anticipate a median added performance boost of 0.57%.

Overall, the bulls may anticipate CVLT stock to rise above $170, so long as the sequence’s implied forecast pans out. Using data provided by Barchart Premier, of the available multi-leg options strategies, the 165/170 bull call spread expiring Aug. 15 appears the most sensible.

This transaction involves buying the $165 call and simultaneously selling the $170 call, for a net debit paid of $290 (the most that can be lost in the trade). Should CVLT stock rise through the short strike price ($170) at expiration, the maximum reward is $210, a payout of over 72%.

Allegro MicroSystems (ALGM)

A global semiconductor technology firm, Allegro MicroSystems (ALGM) is a leader in in sensing and power solutions, particularly for the e-mobility, clean energy and automation markets. Thanks to the underlying relevance, ALGM stock gained over 54% since the start of the year. However, in the trailing five sessions, ALGM is down roughly 10%, potentially providing a discount for aggressive speculators.

In the past two months, ALGM stock has printed a 6-4-U sequence: six up weeks, four down weeks, positive trajectory. Since January 2019, this sequence has materialized 35 times. In 65.71% of cases, the following week’s price action results in upside, with a median return of 4.88%. That will put ALGM on course to reach $35.34 very quickly if the implications pan out.

Running a one-tailed binomial test on the 6-4-U sequence reveals a p-value of 6%, colloquially translating to a 94% confidence level that the pattern is “intentional” rather than random. While not meeting the criteria for statistical significance, the low p-value suggests that the signal is more than just white noise.

Plus, the baseline probability, or the chance that a long position in ALGM stock will be profitable on any given week, is only 51.21%. Therefore, the 6-4-U theoretically tilts the odds in our favor, which may warrant speculation.

Bold traders may want to look at the 35.00/37.50 bull call spread expiring Sep. 19, 2025.

Exact Sciences (EXAS)

A molecular diagnostics company, Exact Sciences (EXAS) is a risky but intriguing idea. From the April lows, EXAS stock substantially higher, demonstrating upside mobility for traders. At the same time, the security is also volatile. Over the past five sessions, EXAS lost nearly 4% and in the trailing month, it’s down about 7%.

From a quantitative perspective, though, Exact Sciences could be intriguing. In the past two months, EXAS stock has printed a 2-8-D sequence: two up weeks, eight down weeks, negative trajectory. Ordinarily, the balance of distributive sessions far outweighing accumulative would scare off investors. However, in eight out of ten cases, the following week’s price action results in upside. This far exceeds the baseline bullish probability of 52.48%, thus theoretically incentivizing a debit-based options strategy.

Notably, the median return following the flashing of the 2-8-D sequence is 4.91%. Should the bulls maintain control for a second straight week, the median performance boost is an additional 2.43%. Basically, with EXAS stock closing on Friday at $48.49, it could be on pace to reach $52.11.

Those interested in taking a shot may consider the 49/52 bull spread expiring Aug. 8. While this is temporally aggressive, the later expiration dates arguably don’t provide compelling risk-reward structures.