Posted on January 20, 2022
We’re smoking the murderers at Philip Morris today (NYSE:PM) with a trade that’s near perfectly crafted.
PM has all the makings of a stock that’s topped.
But don’t take our word for it.
Look at the evidence.
Fundamentally, she’s not so hot –
In short, there’s little to commend the stock fundamentally, outside of a tremendous dividend, to which more and more of the company’s earnings have been directed over time.
Great for shareholders. In the short term.
But bad for growth.
Additionally, we note that the shares have been rising as the dollar has strengthened, bucking both logic and historical precedent.
PM shares climb when the dollar declines in value, and lose altitude when the dollar rises.
That’s because the company reports earnings in dollars, but sells only in foreign markets.
Of late the dollar has been climbing as a Fed tightening cycle is expected to commence – which should put pressure on PM shares.
But it hasn’t.
The company refers to it as “unfavorable currency impact.”
And today we’re emphasizing that ‘impact’.
‘Cause it’s a’coming.
Take a look at the chart –
Technically, Philip Morris presents –
And our trade is structured accordingly.
To wit –
A Jew and His Gold recommends you consider selling the PM June 17th 100/105 CALL spread* for $2.00 (5.85/3.85) and buying the PM June 17th 100/95 PUT spread** for $2.05 (5.60/3.55). Total debit on the trade is $0.05.
Rationale: for just a nickel we get a chance to make a max $4.95 (9900%).
Our max downside is $5.05 (difference between the CALL strikes plus the initial debit).
Our breakeven hits at $99.95, just 1.5% below the current stock price.
And full-bore profits of 9900% are achieved with a decline of just 6.4%.
And best yet, we have five months to get there.
May the G-d of Abraham, Isaac and Jacob crush the evildoers, return holiness to the earth and bring peace to the land.
Many happy returns!