בס״ד

1733% and 16%! The Winnings just Beginnings, Bro. And Hey! Look at That Ford Swerve! (F, OTIS, CAG)

Posted on November 8, 2021

We’re pleased to report that with today’s installment of A Jew and His Money we resume our regular publication regimen.

All affected souls have now returned from hospital, or are working from home until such time as the affliction is put past.

We want to thank all of you who reached out with good wishes and prayers; we were overwhelmed by the support and concern of our readers.  G-d bless you all with good health and a Niagara rush of prosperity.

Before we get to today’s trade, we have two fat winners to close.

The first is our OTIS trade from August 2nd.  It arrived in a communiqué entitled Thanks, I’ll Take the Stairs and urged you to sell the OTIS December 17th 85/90 CALL spread for a credit of $2.50 and buy the OTIS December 17th 85/75 PUT spread for the same.  Zero premium was the result.

And now…?

The CALL spread can be repurchased for $0.90 (1.05/0.15), and the PUT spread can be sold for $3.65 (4.30/0.65).

Execute it, and you skip home with $2.75 on zero outlay.

Adjusted for minimal commissions gives you an exorbitant 1733%!

But there’s more!

Our CAG trade, the details of which can be found HERE, has exhausted us.  It could be there’s more profit to be had, but she may also just stay range-bound for some time to come – it’s impossible to tell.

So we’re shutting her down and redeploying elsewhere.

Situation: we have an open short on a single lot of CAG at $33.50 and a debit of $0.30, and the stock is currently trading for $32.59.

Buy back the short position and take your $0.61 for a 16% gain.

Then maybe take the wife to Denny’s, or buy some ammo for the 9mm.

Today’s trade is based on automaker behemoth Ford Motor Co. (NYSE:F), whose shares have surged 55% in the last seven weeks – mostly on hype related to their (partial) acquisition of EV maker, Rivian.

We’ll have more to say on that shortly, but in the meantime, have a look at the fundamentals –

  • P/E (which averages 8 to 10, under normal circumstances) is 22.80.  For the sake of comparison, GM trades today with a P/E of 7.82.  What is this? – Tesla!? 
  • Dividend Yield is a respectable (in this market) 2.07%.
  • Price to Book is 2.11.
  • However, the company carries too much debt: Debt/Equity is a burdensome 3.95 (!).
  • The company’s expecting an extraordinary leap in sales in the coming year, mostly related to the new edition Ford F-150 EV, but the fact remains that Q/Q Sales and Q/Q Earnings dropped by 4.80% and 23.80%, respectively, as of the latest report some ten days ago.
  • According to analyst consensus estimates, price targets have been bested and the upside is now all-in.

Have a look at the daily chart –

Good health and parnassa to all.

With kind regards,

Hugh L. O’Haynew

Leave a Reply

Your email address will not be published. Required fields are marked *