Start With Bull, Base, and Bear: Using the Diamond Score to Set Your Floor and Your Strikes

TL;DR Before buying anything, calculate three price scenarios — bull, base, and bear. The Diamond Score (above 5 is great; SanDisk sits at 17.85) hands stock buyers a valuation floor to step in at a discount, and hands option sellers a basis for picking a 0.15-delta strike. That combination produced a 107%+ annualized ROI on SanDisk.

People who only calculate the upside go broke

Amateur investors only calculate how much they'll make if a stock goes up. I'll say it flatly: that is a one-way ticket to bankruptcy.

Before I ever execute a trade, I make my system run the math on three distinct futures — the bull target, the base target, and the bear target. The bear scenario in particular — the exact price a stock drops to if the economy cools and growth completely stalls — gets calculated up front.

You have to know that bear price to survive the meat grinder. Putting money in without knowing your precise downside is like sticking your hand into the grinder with your eyes closed.

The Diamond Score: a BS detector

Take SanDisk. When we stood it in front of the bouncer, it failed the test to be a Fortress or a long-term hold. So it went into the Tactical bucket — a stock you date, not one you marry.

But we don't decide that by guessing. We use a proprietary metric called the Diamond Score. I think of it as the ultimate BS detector. SanDisk's current Diamond Score is 17.85. Anything over a 5 is great, and 17.85 is exceptionally high.

The core never changes: the most important thing in investing is the thesis — the bullish logic itself. And the best way to play a bullish thesis is to just buy the damn stock.

One score, two weapons

The Diamond Score is powerful because the same number becomes a different weapon for two different kinds of investor.

User	What the Diamond Score tells them	Execution
Stock buyer	The exact valuation floor	Step in to buy at a deep discount
Option seller	A basis for strike selection	Pick the strike using 0.15 delta as the north star

For someone buying shares, the Diamond Score marks the floor where the stock is finally cheap enough to step in. For someone selling options, it lets them anchor on the 0.15 delta as their absolute north star for the strike.

On SanDisk, that exact tactical execution generated an annualized ROI of over 107%.

In the end, it's a data game

Here's the recap. First, buying hype and holding on for dear life does not work. Second, before you put a single dollar on the line, calculate your bull, base, and bear scenarios so you know your precise downside. Third, keeping a stock in the top tiers requires relentless forensic stress testing.

This isn't a game of guessing — it's a game of data. Running an institutional-grade playbook at this level takes a massive amount of time and discipline. If you have the time and the background to build your own engine, build it and protect your capital.

FAQ

Q: What Diamond Score counts as good? A: Anything over 5 is solid. The SanDisk example sits at 17.85, well above the line. But a high score isn't an automatic buy — you read it alongside the job that stock holds (Fortress, Tactical, and so on).

Q: Why use 0.15 delta as the strike basis? A: For an option seller, the 0.15 delta is a reference point that balances assignment probability against the premium collected. Combine it with the valuation floor the Diamond Score points to, and you can engineer ROI structures north of 100% annualized, as in the SanDisk case.

Q: Why emphasize the bear scenario so much? A: Calculating only the upside means betting blind on the downside. Knowing how far a stock falls when the economy cools lets you hold your position through a crash without panic-selling.