Posted on April 14, 2022
This is going to be a long one, so let’s start with a couple of announcements.
First, our frenzied Pesach subscription giveaway continues.
You get dynamite reductions on all our yearly memberships UNTIL THE END OF CHAG.
That’s just eight more days for all good Jews and Noahides to go to the show, step up to the plate and swing for the fences.
Click HERE for details.
Second, next Thursday’s issue of A Jew and His Gold will not be forthcoming, owing to the seventh day convocation of Shevi’i shel Pesach (4/21).
We’ll resume with our regular publishing regimen the following Monday (4/25).
Third, we have one trade to close today, a number that require your attention (as today is April options expiry – owing to the holiday-shortened work-week), and, of course, a new trade to offer.
May you all experience a genuine exodus from your own personal Egypt this year, and may the Final Redemption arrive speedily, bringing the entire world to a new era of peace, prosperity and genuine health.
And now we get down to it.
We’re closing our SHOP initiative, the details of which can be found HERE.
To sum, we’re short three SHOP July 960 CALLs, and are holding a credit of $32.20.
With SHOP closing last night at just $591.06, we figure it’s the ideal time to close.
Buy back the CALLs for $8.80 each and you walk away with a hefty $5.80 on an initial outlay of just a dime.
And that makes for a helluva nice 5700%.
Call it aromatic.
Next: on March 28th we launched an RGLD trade in a letter called Jews, G-d, Gold and History: Precious Metals Poised to Deliver. There, we urged you to sell the RGLD April 14th 135/140 CALL spread for $2.40 and buy the RGLD April 14th 140/135 PUT spread for $2.45. Total debit on the affair was a nickel.
While we still like the trade, it appears we’ll be on the hook for most of the five points on the CALL spread at expiry. So we’re acting thus –
We’re setting the RGLD June 17th 140 synthetic short* for a credit of $4.40 (10.20/5.80), offsetting the loss on today’s CALL spread (details after the close) and giving us full exposure to the coming downside.
On March 24th, Watch: Wall Street Hangs Expensive Mosaic arrived at your inbox, recommending you sell the MOS April 14th 66/71 CALL spread for $1.71 and buy the MOS April 14th 66/62 PUT spread for $1.69. Total credit on the affair was two cents.
Here, too, we face a five point loss on the CALL side, and we’re therefore acting as above –
Set the MOS May 20th synthetic short with a 70 strike for a credit of $4.85 (8.85/4.00).
That will give us another month of life, all but eliminate our debit, and open the way to full participation on the downside.
Full details after the close.
Our CF trade hit the airwaves on March 16th in a missive called CF Fertilizes Our Next Profit Harvest! The bet was predicated on selling the CF April 14th 90/95 CALL spread for a credit of $2.40 and buying the CF April 14th 92.50/87.50 PUT spread for $2.30. Total credit on the affair was $0.10.
Set the CF May 20th synthetic short at 100 for a credit of $8.40 (12.90/4.50).
That will flip our debit to a credit of roughly $3.50 (details at the close) and allow us to participate fully in the coming decline.
It was a fine 9th of March when our KR communiqué traversed the trans-oceanic fiber-optic and arrived at you in the form of This Four Cent Investment Could Bag You 17,400%.
We beseeched and implored you then to sell the KR April 14th 55/60 CALL spread for $1.93 and buy the KR April 14th 55/48 PUT spread for $1.97. Total debit was $0.04.
And today, we’re in need of a fix. With KR at $58.34 the trade is still valid, but shy of our intended goal.
We’ll be in the hole by perhaps $3.00 when the CALL spread expires this eve, and that means we have to move.
Like this –
Set the KR May 20th 55 synthetic short for a credit of $3.09 (4.15/1.06). That will roughly eliminate the outstanding debit and give us full profit exposure on any decline.
Exact details after the close.
Our PXD trade was featured in Fake News Frenzy: Energy Prices Triple Overnight! The missive was delivered on February 28th and bid you buy the PXD April 14th 225/220 PUT spread for $3.40 and sell the PXD April 14th 260 CALL for $3.20. Debit on the trade was $0.20.
Unless we get some heavy action on the upside, it appears the options will expire worthless and we’ll take a loss of $0.20 – our initial debit on the trade.
So be it.
Our AA trade was delivered February 17th in a communiqué called ALCOA – Foiled Again! The trade stipulated the sale of the April 14th 75/80 CALL spread for $1.80 and purchase of the April 14th 70/65 PUT spread for $1.95 (5.10/3.15). Total debit on the trade was $0.15.
Here, too, we face the full debit on the CALL spread, and because we still like the trade, we’re again setting a synthetic short – the AA May 20th 80 strike for a credit of $7.05 (10.95/3.90).
That puts us $1.90 in the plus column and gives us another month to play.
The Evils of Halliburton, Episode #244 arrived on February 14th and encouraged you to sell the HAL April 14th 32/34 CALL spread for $0.95 and buy the April 14th 34/32 PUT spread for $1.02. Total debit was $0.07.
At the close, the piper’s going to call for his $2.00 on the CALL spread, but that doesn’t mean the trade idea belongs in the landfill.
We rather like it still.
So we’re acting as follows – we’re setting the HAL June 17th 38 synthetic short for a credit of $2.07 (4.25/2.18).
That offsets the loss, gives us two more months, and let’s us play with any HAL pullback that ensues.
Moving on, we arrive at our XOM trade from February 7th and a dispatch called Exxon Mobil Director Pockets $120 Million. Now It’s Your Turn!
The rec was to sell the XOM April 14th 80/82.50 CALL spread for $1.10 and buy the XOM April 14th 80/77.50 PUT spread for $1.16. Total debit on the affair was $0.06.
Well, today we’re still fond of the trade, though the CALL spread will likely tap us for $2.50 at the close.
Action: set the XOM May 20th 82.50 synthetic short for a credit of $3.78 (5.75/1.97).
That turns our debit to a credit of roughly $1.10 and gives us an extra month to profit from any XOM retreat.
Our GWW trade had a nice profit, but, alas! we waited too long on it.
The letter went out on the 24th of January and was called A Little Head and Shoulders Maintenance on Grainger. The trade was built on a buy of the GWW April 14 490 PUT for $28.20 and a sale of both the GWW April 14th 470 PUT for $16.40 and GWW April 14th 440 PUT for $9.80. Total debit on the affair was $2.00.
Today, we’re still GWW bears, though all our options will expire worthless tonight, leaving us holding our initial debit.
So we’re recommending the following action –
The Following Action: sell the GWW May 20th 550/560 CALL spread for a credit of $2.40 (9.50/7.10).
That’ll provide us a small profit when it expires a month from now, G-d willing.
The details of our SEE trade can be accessed HERE.
In summary, we’re in possession of the 55 synthetic short expiring this eve and a credit of $1.10
But with SEE trading at $67.30, we find it necessary to take the following evasive action –
Sell two (2) SEE May 20th 60 CALLs for $6.50 each.
That will give us a credit of roughly $1.80 (full details after the close) and another 30 days play.
Details on our FCX trade can be found HERE.
All told, we’re holding a debit of $0.48 and tonight’s 33 synthetic short.
And that means our short CALL is in-the-money.
We therefore recommend you repurchase it toward the close for roughly $16.00 and sell three (3) FCX May 20th 44 CALLs for $6.40 each.
That will flip our debit to a credit of approximately $2.75 and give us another month to profit.
Today’s trade is a rather straightforward look at American Eagle Outfitters (NYSE:AEO), makers of jeans in a more traditional mold.
The company’s stock has been court-martialed, shot and sent to the Biden White House to be bored to death…
And that’s why we love it.
As the chart below shows, it’s very likely the stock has hit bottom and is ready for a bounce.
But first, some fundamentals –
Only problem is supply-chain issues stemming from factory closures in Vietnam and additional freight costs that are afflicting everyone.
That said, AEO grew their online direct-to-customer business during the BATFLU by 46%, and the brand itself remains rock solid.
So we’re OK there.
Now the chart –
Technically, it’s like this –
All things considered, this is an extraordinarily safe bet – as it’s structured – and we’re recommending you take on a full plateful of matza.
Like this –
A Jew and His Gold recommends you set a covered CALL on AEO stock using the May 20th 19 strike. Buy the stock (now trading at $17.47) and sell the option for $0.47. Total debit on the affair is $17.00.
Rationale: if all goes well, and we get the pop we’re expecting, your max return on the trade is a solid 11.7% – in just over a month.
We have a number of other candidates ready for this strategy in the weeks ahead. As the market bottoms, we’ll seek to play a good quantity of stocks in this manner.
Feel free to set a STOP sell order on the stock at $16.90, or thereabouts, in order to limit losses in a worst case scenario. (At that price your loss would be a dime.)
And enjoy your seder, friends. May we all merit to see the chimes of freedom flashing.
Many happy returns,