I’m about to tell you something that sounds backward…
I spend most of my time hunting uptrends — stocks making higher highs, clean charts, momentum on my side. That’s my bread and butter.
But there’s one exception where I’ll step outside that wheelhouse: Failed IPOs. I call them FIPOs.
And right now, I’m working a handful of them: Fly (FLY), Fermi (FRMI), Circle (CRCL), and Fig (FIG).
Here’s the setup: These are stocks that came public with big expectations, ran hot on day one, and then absolutely cratered. We’re talking about companies that IPO’d at one price, spiked higher and then collapsed back to — or below — where they started.
Fly hit a day-one high of $75. Now it’s trading around $30. That’s the kind of pain I’m looking for.
Because once a stock has disappointed that hard, everybody’s sufficiently bummed out.
They can’t disappoint you anymore. The hype is gone. The euphoria is dead.
The early buyers who got wrecked have already sold. When that washout happens, you’re left with something the market has stopped pretending about — and that’s where mispricing often hides.
Why I’m Playing Fermi Three Ways at Once
Let me walk you through one specific example: Fermi.
I’m not just long the stock… I’m running three positions simultaneously. I’m long the stock, I’m short the $7.50 puts expiring Jan. 16, and I’m short the $5 puts.
Why stack it like that? Because I think this thing is poised for a massive pop higher on news. Not earnings. Just a press release.
Something that flips the narrative.
And if it doesn’t? If it keeps falling? I’ll just be buying it lower. Is this risky? Absolutely. This is 100,000% pure speculation.
These setups are not steady, predictable trends — they’re powder kegs that either fizzle into nothing or blow up in your favor. But that’s the appeal.
When a stock has already been beaten senseless, the downside becomes clearer. The worst has already happened in full view, which means the next meaningful move is often tied to whether the company can spark even a tiny shift in perception.
The Logic Behind the Pain Trade
What I love about this setup is that the capitulation already happened.
All the drama is in the rearview mirror.
What’s left is a stock that bottomed out right where it started or lower — after the market wrung every ounce of optimism out of it.
That’s when I get interested.
Because if you catch one of these right — if the company announces something that changes the narrative — all it’s gonna take is one little press release, and we’re back at $50.
That’s my thinking on Fly. That’s my opinion on Fermi. That’s why I still hold all my FIPO positions — even though they’re way outside my normal uptrend playbook.
These are not safe, steady trades so be warned. But if you’re willing to size small, embrace volatility, and accept the real possibility of being wrong, the asymmetry can be worth it.
When everyone’s sufficiently bummed out, that’s when opportunity shows up quietly.
Trade well,
Jack Carter
Jack Carter Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
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We develop strategies to the best of our ability, but we cannot guarantee a future return. There is always a risk of loss when trading. Past performance is not indicative of future results. The results shown are from a 237-trade backtest from 1/1/20 – 1/1/26. The result was a 70% win rate, 40% average return (winners and losers), with a 7-day hold time.
