Posted on June 15, 2022
A Grocery Store, friends, is the vehicle Hashem has chosen today to transport us to financial freedom.
But before we get to the trade, we have two to close.
Sharpen your pencils and sit up straight.
First up is our SAIA trade, whose details can be found HERE.
In brief, we’re holding three short June 17th 200 CALLs and a credit of $15.50.
The CALLs sell for $2.65 each, and we say buy them back.
Get it done and you walk with $7.55 NET on an initial expenditure of $28.90.
And that’s a gain of 26%.
Next is our IBP trade that sees us holding two short June 17th 90 CALLs and a credit of $9.91.
The CALLs can be repurchased for $2.90 each, and we say it’s time.
Execute and you pocket $4.11 NET on nothing laid out (trade was opened with a credit of $0.20).
Adjusted for minimal commissions gives you a 2773% profit.
And that makes it all worthwhile…
And now to Albertson’s (NYSE:ACI), the aforementioned Idahoan grocery that beat on revenues and earnings two months back – but still lost better than 20% in the weeks that followed.
What’s more amazing is that directly following that decline we saw an incomprehensible rise of better than 20% on the stock.
The shares are manic.
And everyone’s trying to figure who holds the upper hand – bulls or bears.
But our charts below make it abundantly clear.
In a moment.
In other words, the stock ain’t goin’ nowhere.
And why is that…?
Retail-generated research shows people making fewer trips to the mall, but larger grocery purchases, on average, per shop.
You can bet they’re cutting out the non-essentials, too.
And all a result of price inflation, including gas costs, which are now starting to bite.
As the chart below shows –
This is the daily for the last year, and it clearly shows –
Now check out the weekly –
This is the same, full year of chartitude for ACI, and it presents –
That could take some time to ensue – if it does – but we’re not betting on it over the short term.
Our trade requires a far more modest retreat to cash in. But it’s SPECULATIVE.
Check it out –
A Jew and His Gold recommends you consider selling the ACI July 15th 27/29 CALL spread* for a credit of $0.95 (2.30/1.35) and buying the ACI July 15th 29/27 PUT spread** for $1.05 (1.80/0.75). Total debit on the trade is $0.10.
Rationale: the trade holds the promise of $1.90 NET on a $0.10 investment. That’s 1900%.
Max loss is $2.10 (difference between the CALL strikes plus the initial debit).
Breakeven is $27.90, just $0.64 below price at the time of writing (2.2%).
We label the trade SPECULATIVE because it expires in exactly 30 days – a shorter time period than we’re used to offering.
That said, the G-d Of Israel will have His way.
Many happy returns!