Posted on February 27, 2023
According to their most recent literature, Terex Corp. (NYSE:TEX) manufactures and sells “aerial work platforms” and “materials processing machinery” for the construction, infrastructure, recycling, quarrying and mining industries.
In other words, they’re an old-line industrial operation.
So how is it investors decided it should be a momentum stock?
G-d only knows…
We don’t like the smell of that, and we don’t believe it’s a coincidence that the selling occurred directly after the latest earnings release on February 10th.
TEX managed to beat on both earnings and sales, but the stock has only climbed one half of one percent since then.
Maybe because all those insiders are bailing…?
Either way, it doesn’t look good.
Take a peek now at the technicals—
Bottom line is like this—
Neither of which we require to cash in fully on today’s trade.
A Jew and His Money recommends you consider selling the TEX July 21st 55/60 CALL spread* for a credit of $2.50 (7.70/5.20) and buying the TEX July 21st 60/55 PUT spread** for $2.80 (6.40/3.60). Total debit on the affair is $0.30.
Rationale: just thirty cents buys you a chance to win $4.70 (a profit of 1567%).
Max loss is $5.30 (difference between the CALL strikes plus the initial debit).
Just a 5.7% decline over the next five months will deliver us the full trove on this one.
And that shouldn’t be too onerous a task; TEX has a very high beta of 1.73, meaning when the market declines by one percent, TEX drops by 1.73%.
So all we really require is a pullback on the S&P 500 of 3%.
And is that too difficult for the Creator of Heaven and Earth to accomplish…?
With kind regards,
Hugh L. O’Haynew
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