Posted on September 16, 2020
We start with the money.
Our August 12th communiqué was entitled Wacky, Wacky, Wacky is the World of Wuhan, The Whole World is Filled With Derangement, and it recommended you sell shares of DBB, then at $15.00 and buy GGB, then at $3.35 – in a 1:4 ratio (i.e., one DBB sold for every four GGB purchased). Then, we urged you to purchase four (4) GGB March 19th 3 PUTs for $0.50 each. Total debit on the trade was $0.40.
Today, DBB sells for $15.59 and GGB goes for $4.04 (and the long GGB PUTs sell for $0.20 each).
Buy back your DBB and sell off GGB – and sell the four long PUTs while you’re at it – and you take in $1.37 on $0.40 spent. And that’s a wonderful one month take of 242%.
Annualized (for those who are into that sort of thing), it’s a 2904% win.
Next up was our WPM/GLD pairing from July 28th. The directive was called Reinstate the Holy Qorbanot! (Along with that great PM trade), and there we urged the purchase of the WPM October 16th 55/60 Strangle for $14.00 and sale of the GLD September 30th 183 Straddle for the same $14.00. Zero premium was the result.
On August 16th we closed out the PUTs for $4.95, and today we’re closing the CALLS.
The WPM October 16th 55 CALL is at $2.03 and the GLD September 18th 183 CALL goes for $1.57. Sell the former, buy back the latter and you add $0.46 to your existing $4.95, for a grand total $5.41 on nothing spent.
Adjusted for minimal commissions gives you an astounding nine week return of 3506%.
And that’s before annualizing!
Take a deep breath, bro.
We can understand the need for gardening equipment – especially during this Batflu hysteria.
Everyone suddenly sees the value of cultivating his own little patch of grass, and we’re all for it. We’ve spoken about it at length.
Yet, all the same, there’s only so far and so high that stocks that traffic in these products can rise before one’s head begins to shake.
And that’s the stage we’ve come to with the TORO Company (NYSE:TTC), Bloomington, Minnesota’s manufacturer of power mowers and snow blowers.
Her stock wields a P/E of 31.5, has a Price to Book of 8.4, and pays a 1.2% dividend.
Nothing so bullish there.
The stock is also up 65% since the Wuhan bottom, and that’s apparently caught the attention of insiders.
After doing absolutely nothing for the first half of the year – neither buyers nor sellers would they be – June arrived.
And then those in the know dumped just under $2 million in stock.
Then last week, they did it again.
They offloaded a full 25% of their entire share allotment – a heady $7 million worth.
SO we took a closer look.
Here’s the daily chart since New Year’s –
Technically, it appears we’re at a turning point.
And it’s for all the foregoing that we’re now recommending the following SPECULATIVE short CALL spread and PUT purchase –
A Jew and His Gold recommends you consider selling the TTC October 16th 80/85 CALL spread for $2.85 ($5.70/$2.85) and buying six (6) October 16th 75 PUTs for $0.45 each. Total credit on the trade is $0.15.
Maximum loss on the trade is $4.85
Maximum gain is unlimited.
Many happy returns!