Three Days Later, We Close for 4700%! …and Kix, Chex, Trix – They Call it Food, and We Eat it. (GIS, KLAC, UPS)

General Mills’ (NYSE:GIS) options are offering incredible value to today – but only to those whose investment savvy affords them artisan-like know-how into the craft of multi-directional leveraged security applications.

Call it what you will, but it works.

And no giggling…

Closing Trades

Before we get to the today’s GIS boilermaker (with a 4900% take on offer), we’ve got two open bets that can now be terminated for profit.

First up is our KLAC trade, opened just THREE DAYS AGO, on May 9^th.in a letter called KLA Has a Chip on its (Right) Shoulder.

The trade recommended selling the KLAC June 17^th 380 CALL for $4.70 and buying the KLAC June 17^th 260 PUT for $4.80.  Total debit was $0.10.

In order to avert a catastrophic loss, we also urged you to set a STOP buy on the shares at 380.

And today…?

KLAC has declined nicely, so we’re recommending as follows –

Sell the 260 PUT for $4.80 and leave the STOP buy in place (along with all conditions recommended at the open).  In the unlikely event that the stock climbs nearly 25% in the next month, you’ll remain protected.

Either way, though, you’ll still pocket an incredible 4700%!

For those who wish to avoid the stress of that potential rise toward 380, you can also buy back the short CALL for $3.70.

Do it, and you walk with precisely $1.00 (1000%) for your troubles.

Should you opt for that measly 1000%, just be sure to cancel the STOP at the same time.

Next is our UPS initiative whose particulars can be accessed HERE.

To sum, we’re holding one short lot of UPS with a breakeven at $178.20.

With the shares now trading at $177.46, we’re crying uncle.

Buy them back and you exit with $0.74 on an initial credit of $0.75.

Adjusted for minimal commissions, gives you a 893% haul.

And that’s just fine by us.

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Now for today’s General Foods delirium.

Minneapolis’ GIS, of course, is famous for its branded cereal digestibles, but did you know the company also markets “wellness beverages” and “shelf-stable vegetables”?

A poison by any other name…

Consumer staples have been doing well of late, but like every market leader, the time eventually comes to relinquish the poll position and take a drubbing.

And that’s precisely General Mills’ fate, in our humble estimation.

With inflation (and shrinkflation) taking their bite, and an FDA investigation into Lucky Charms (1000’s poisoned – no joke) and analysts expecting sluggish growth for the coming year, we say the stock’s latest rise is her final one – for the time being.

Fundamentally, GIS presents thus –

• A multiple of 19.18x last year’s earnings (and too high by half, in our reckoning),
• A dividend yield of 2.84% (which is fine, by today’s standards),
• Price to book of 4.44 (again, no bargain),
• Debt/Equity at 1.25 (also bloated), and
• Insiders have been busy selling their shares over the past six months – 30.06% of them, in fact, for a $17 million total.

And why not, when you can buy them back cheaper, later?

Now look at the chart –

This is six months’ worth of GIS pricing, and it shows –

1. RSI and MACD diverging from price (in green).  This is bearish – and will trigger large-scale selling when the two dive below their respective waterlines.  That’s still several days away.
2. A number of fundamental factors are starting to weigh on investors, as well, namely (in purple) industry-wide labor shortages, supply disruptions and soaring input costs – all of which have put a temporary lid on price…
3. A double-top is the technical result (in red), with the lid at $74.
4. Below that, a gap at 63 needs filling (in blue).
5. But we need a decline only to 70 to pay us mammoth profits (in black).

Our trade is a Michaelangelean masterpiece of timeliness, texture and composition.

A redefinition of ‘beauty’ in every respect.

Judge for yourself (and no giggling) –

A Jew and His Gold recommends you consider selling the GIS June 17^th 70/72.50 CALL spread* for a credit of $1.25 (3.40/2.15) and buying the GIS June 17^th 72.50/70 PUT spread** for $1.30 (2.70/1.40).  Total debit is $0.05.

[*Sell the 70 CALL and buy the 72.50 CALL.  **Buy the 72.50 PUT and sell the 70 PUT.]

Rationale: we have a nickel laid out to gain a potential $2.45.  That’s 4900% in potentia.

Maximum downside is $2.55 (difference between the CALL strikes plus the initial debit).

Breakeven comes at $71.20, just $0.60 (0.80%) below the current price.

And full winnings are secured with a decline of just 2.5%.

That’s what used to be called a hum-dinger.

When the forces of evil have fully surrounded the Holy Jewish nation and only the Living G-d of Israel can bring salvation…

So it comes.

May it be b’rachamim.

And may you, too, good Jews and Noahides, find yourselves on the right side of the geulah shleimah.

Many happy returns!

Matt McAbby

Follow @HughLOHaynew