Fair Value of Entry for any Stock: Good Entry Point

 The good entry point could be a  Strike Price (SP) for your Sell PUT
or just a GTC Buy Entry point.

Here is the proposed formula 'toying with:

Proposed Formula

Where:

1. Fair Value is derived from FCF.

2. Risk Adjustment Factor is based on Beta.

3. Momentum Adjustment Factor is based on Bull/Bear Power.

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Step-by-Step Explanation

1. Fair Value from Free Cash Flow (FCF)

   - Use the Discounted Cash Flow (DCF) method to calculate the intrinsic value of the stock:

     

    

   - This provides a fundamental baseline for the stock's value.

2. Risk Adjustment Factor (Beta)

   - Beta measures the stock's volatility relative to the market. Incorporate it as a discount factor:

   - A higher Beta increases the discount, lowering the entry price to account for higher risk.

3. Momentum Adjustment Factor (Bull/Bear Power)

   - Use the Bull/Bear Power indicator to adjust for market momentum:

     - If Bull Power > 0, add a premium to reflect bullish momentum.

     - If Bear Power < 0, apply a discount to reflect bearish momentum.

This formula combines fundamental valuation via FCF with adjustments for risk (Beta) and market sentiment/momentum (Bull/Bear Power). It provides a balanced approach to determining an entry price that accounts for both intrinsic value and market dynamics.

Here is an example with $AMD ::

The calculated good entry price for AMD is approximately $35.20, based on its Free Cash Flow valuation, Beta for risk adjustment, and Bull/Bear Power for momentum adjustment.

This price reflects a balance between AMD's intrinsic value and market dynamics, offering a conservative entry point for investors considering both volatility and sentiment indicators.

Here is the fair values from NVDA from other methods:

Based on the proposed method, its Entry point is coming at $56.55, or the most conservative.

Thanks fo reading.