Posted on May 13, 2021
Pay attention –
We’re closing two enormous trades that were just opened over the last few weeks.
The first is our Estee Lauder initiative from May 3rd.
The directive was called Calling All Aspiring Cosmeticians, and it urged you to sell the EL October 16th 360 CALL for $5.30, and buy the EL October 16th 250 PUT for $4.70. Total credit was $0.60.
The long PUT sells for $5.60 and the short CALL goes for $2.15.
Sell the first and buy back the second, and you net $4.05 on ZILCH laid out.
Adjusted for minimal commissions gives you a ten day haul of 2600%!
Next up is our Restoration Hardware trade of April 29th. The letter was called PURE MOMENTUM. There’s Precisely No Value Here, and there, you’ll recall, we recommended you sell the RH August 20th 1000 CALL for $8.30 and buy the RH August 20th 480 PUT for $8.20. Total credit was $0.10.
The long PUT is fetching $12.30 and the short CALL goes for $3.50.
Sell the former and buy back the latter, and you take home $8.90 on NOTHING spent.
Adjusted for minimal commissions gives you a TWO WEEK win of 5833%!
Today’s trade goes after the lighting business, and Acuity Brands (NYSE:AYI), in particular.
Because the party’s over.
Acuity doesn’t possess the best fundamentals, to be sure.
The technicals leave a lot to be desired, as well.
Here’s the daily chart –
To begin –
The weekly chart is also damning.
Have a gander –
And we’re playing it as follows –
A Jew and His Gold recommends you consider selling the AYI November 19th 220 CALL for $6.70 and buying the AYI November 19th 140 PUT for $5.80. Total credit on the trade is $0.90. Set a stop buy for the shares at 220.
Rationale: the trade is a synthetic short with split strikes.
The strikes we’ve selected for the trade are $40 OTM in both directions (current price is $180.72).
We see the probability of the STOP buy being triggered as minimal, considering
All the same, should the STOP be triggered, reset a STOP sell for the shares at the same 220 level in order to keep the trade square. And again, should that STOP be activated, reset the STOP buy. There should always be an open STOP in place at 220 until the trade is closed.
We’ll very likely close the trade long before expiry, as the PUT’s value begins to overwhelm that of the CALL.
Maximum gain on the trade is unlimited.
Maximum loss is NIL (with proper STOPs in place).
Many happy returns,