Posted on October 31, 2022
Before we explode your wallets with our latest cash-bomb, we’ve got one to close for atomic profits.
Out T/VZ pairing arrived at your inbox exactly a week ago in a dispatch called Minimal Risk/Maximum Leverage in a Two Way Communications Play.
The recommendation called for the short-sale of one lot of T at $17.10, the purchase of a T January 20th 18 CALL for $0.50 and sale of a T January 20th 16 PUT for $0.50. That gave us a credit of $17.10. We then urged you to buy ten (10) VZ January 20th 35/40 CALL spreads for $1.74 each. Total debit was $0.30.
Both stocks have climbed, and the situation is thus –
Close the T side of the trade by selling the long CALL (for $1.16), buying back the stock ($18.48) and the short PUT ($0.25). That gives us a total debit of $17.57.
On the VZ side, close all 10 spreads for $2.71 each (3.50/0.79) for a total credit of $27.10.
And that’s 3077%, brother.
Makes you feel like a real Action-Man, no…?
Y’all have heard of Lockheed Martin (NYSE:LMT), so we won’t bore you with descriptions and jargon from the land of the military-industrial complex.
Suffice to say that LMT stock should rightly soar in the current overly martial and bellicose global milieu.
The only thing not war-related about LMT is the beef-barley soup served in the HQ cafeteria.
Anyway, we’re targeting LMT because of the stock’s action over the last several weeks.
That is, the shares have outpaced the S&P 500 since the year began—a reasonable outcome, given existing geopolitical realities.
But as always, the risk of hype taking over is ever-present.
So, yes, there were strong Q3 results, and yes, buybacks and large orders also helped the cause.
But the sky’s the limit, friends—even for an outfit that makes missiles.
And LMT overshot even that boundary.
Consider some fundamentals –
In fact, the entire defence contracting realm is facing parts shortages and inventory management issues due to ongoing supply chain problems and the global computer chip depletion crisis.
Throw in a labor shortage and it’s difficult to see how last quarter’s numbers are going to be matched in the coming months.
Existing contracts are already facing long delays before they get fulfilled.
With kind regards,
Hugh L. O’Haynew