Despite some ethical concerns, U.S. Senate and House of Representatives members frequently buy and sell stocks of publicly traded companies, often with fantastic returns.
Elected officials' trading habits are also public data in their mandatory financial disclosures, so MarketBeat's congressional trading tracker allows investors to keep an eye on who's trading what in Washington. And few officials draw more attention than former House Speaker Nancy Pelosi, who recently revealed a prominent position in cybersecurity giant Palo Alto Networks (NASDAQ: PANW).
According to a recent Periodic Transaction Report from the U.S. House of Representatives clerk, Pelosi (or possibly her husband Paul Pelosi of venture firm Financial Leasing Services) made two February trades of PANW call options.
The first transaction occurred on February 12 and involved the purchase of 50 PANW call options with a strike price of $200 and an expiration of January 17, 2025. The reported cost of this trade was between $500,000 and $1 million (Officials only need to report a specific range of the position value, not the exact figure.)
Unfortunately for Pelosi, Palo Alto shares plummeted after lowering guidance during the February 20 earnings conference call.
Despite the poor 2024 guidance, the Pelosis were undeterred. In the same periodic transaction report, they purchased a second set of call options — this time 20 calls with the same $200 strike and January 2025 expiration for a reported $100,000 to $125,000.
PANW shares rebounded sharply following earnings as financial and social media widely reported Pelosi's trade. While this particular trade may not yet be on the green side of the PnL table, the January 2025 expiry provides plenty of time for the position to recoup its value, and Pelosi's track record with large-cap tech stocks is strong — especially Nvidia Corp. (NASDAQ: NVDA).
NVDA and Pelosi have been linked ever since a disclosure revealed a purchase of NVDA call options on November 22, 2023. According to the report, Pelosi purchased 50 NVDA calls with a strike price of $120 and an expiration date of December 20, 2024. The total value was between $1 million and $5 million when the trade opened (estimated to be around $1.5 million based on options price data). As you'll see in the chart below, this position has been a big winner for the Pelosi portfolio.
NVDA shares hovered around $450 to $500 per share in November 2023 when Pelosi opened her 50-call option position. The stock had already rebounded significantly from its 2022 lows near $100, but market indices were still significantly below all-time highs and sentiment was mixed at best. The stock has nearly doubled in just three months since she opened the position. As of this writing, 50 call options at the $120 strike price and December 20 expiration would be worth over $3.3 million.
Pelosi scored a massive win with her NVDA trade, but her initial buy of PANW call options preceded a massive earnings decline. ETFs have tried tracking the trading habits of reps and senators with mixed results. Here’s a chart comparing the Unusual Whales Democratic and Republican Trading ETFs with Invesco QQQ (NASDAQ: QQQ), the NASDAQ 100 tech ETF.
The Democratic ETF has a significant concentration of large-cap tech stocks, while the Republican ETF features more oil and gas and consumer staples stocks. But regardless of the difference in holdings, both congressional trading-themed ETFs failed to match QQQ’s returns over the last 12 months.
Learn more on MarketBeat's Compare Stocks page.
