Posted on May 16, 2022
Today’s trade is a flier.
Good Jews and loyal Noahides, we’re betting that in VERY short order we’ll pull a 9.00% return on a Foot Locker (NYSE:FL) trade and lose NOTHING if we’re wrong.
But wait! How can that be?
Every trade has a downside. Every trade involves risk, no?
Anyway, we’re moving in slightly different direction today, friends, insofar as we’re offering pertinent details of our intentions to subscribers only.
Don’t want to give away the farm, don’tcha know.
Not even by hint.
That said, if you’re interested in a FREE 30 day trial, you can certainly access today’s trade by clicking HERE. [Or just paste the following in your browser: https://www.ajewandhismoney.com/membership/free-30-day-trial/]
It doesn’t cost a thing, and you needn’t front your credit card, either.
Just an email, and you’re rarin’ to go.
And guaranteed to lose nothing.
A VERY. SHORT. PERIOD.
Maybe consider going in big…?
It might even cure your asthma…
Anyway, the key to the trade resides in the broad market’s recent decline and the tendency we’re seeing in select names to buck that trend higher.
Yet as we stated above, it doesn’t matter what ultimately happens with FL. We can’t lose money on this one. The structure of our initiative guarantees that.
Now look here –
This is FL pasted against the S&P500 during the latest bout of market weakness.
Clearly, FL has outperformed for nearly three full months, and we expect a good pop higher from the stock on any sign of broad market strength – whether it’s lasting or only temporary.
But we may not need even that.
The big picture’s as follows –
The company’s stock has been in a downdraft since inflation began its bite late last year. Traditionally, folks don’t go splurging on new runners when times are tight.
That said, the business remains strong.
Foot Locker beat analyst expectations last quarter by nearly 17% (!), but were punished for not guiding stronger for the rest of the year. Again, inflation was the great unknown.
More than that, the company recently raised its dividend by 33%, offering investors a proud 5.37% annual cash payout for just sitting tight and opening their pockets wide enough to catch that additional moolah.
As for the rest of the fundamentals, they look like this –
So why all the glum faces?
We say this one got hammered savagely and without regard to truth, justice or karmic discretion.
Have a look at her chart –
Technically, the following points are relevant –
And it looks like this –
A Jew and His Money recommends you consider setting the FL May 20th covered CALL using the 31 strike, i.e., buy the shares (now at $29.77) and sell the 31 CALL (for $1.45). Total debit on the trade is $28.32. Set a STOP sell on the shares at the same $28.32.
Rationale: should the stock rally above $31 by Friday’s close, we’ll pocket a fragrant 9.00% for our efforts.
Should it drop to $28.32, we’ll be sold out in accordance with the open STOP order, and still be holding our short CALL.
At that point, it will be important to set a new STOP buy order on the shares at $31 in order to forestall any loss on the open short CALL.
And that’s it.
Either you walk with 9.00% in five days.
Or you break even.
Or somewhere in between.
We’ll be in touch should anything malodorous arise.
And may the Lord G-d of Israel ever be praised.
With kind regards,
Hugh L. O’Haynew