Posted on September 23, 2021
A very happy Chol HaMoed to all you good Jews and Noahides. May you experience only peace in the sanctified space of your sukkah.
Before we discuss today’s trade, just a quick report on our PAYX trade profit.
Last Friday, with options expiring, we recommended the following –
The trend on PAYX is lower and we expect further losses through today’s close.
Leave her be, and with G-d’s help we’ll expand the current $0.58 gain into something more meaningful.
So let it be written…
So let it be done!
Imagine our gymnastic-like joy when, at the close, PAYX traded lower to $108.78 – offering us a gross profit of $1.22!
Less the $0.05 we spent on the trade, our NET take was an extraordinary 2340% – in just 60 days!
And that’s worth all the bean dip you desire.
Congrats to all who entered a train-load of units.
We’re proposing a bet on Costco Wholesale Corp. today (NYSE:COST), big-box commoditizer of all things retail.
Here’s the company’s fundamentals –
Technically, too, the stock looks priced to SELL.
Here’s the daily chart –
And the takeaway is –
And the weekly’s no better.
Have a look –
In other words, cascading losses on COST appear increasingly likely.
And that’s why…
A Jew and His Gold recommends you consider selling the COST December 17th 480/490 CALL spread* for $1.70 (7.25/5.55), and buying the COST December 17th 440/420 PUT spread ** for $6.15 (13.60/7.45). Total debit on the trade is $4.45.
Rationale: our maximum take on the trade is $15.55, and for that we have to lay out $4.45.
Our maximum loss is $14.45 (difference between the CALL spread strikes plus the initial debit).
As for that max loss, COST would have to defy all its technical underpinnings to put us fully in the red, rise above its latest highs and likely register another overbought RSI reading in the process.
And we don’t count that as a plausible eventuality.
There certainly could be a bounce down the road – but not until the daily MACD indicator reaches its waterline, which appears at this juncture to be at least 10 days away.
It’s more likely we’ll get a waterfall move lower, more or less in line with the broader market, until we reach the 410 range.
And that would more than pay us for our troubles.
This is Zman Simchateinu, Yidden. Enjoy!
And many happy returns!