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Dynamite Stick: Philip Morris Delivers Smokin’ 4080% Gain! … Watch Now as We Line Up Chevron For a Potential 9900%!(CVX, PM)

Posted on March 14, 2022

With open trades on Exxon Mobil and Pioneer Natural Resources , you’d have thunk we’d be satisfied.

But we’re not.

As the old Wall Street adage goes –

When’s best to invest…?

When there’s crude in the streets.

Or something like that…

Anyway, we’re getting active today with another major oil producer – for a maximum potential gain of 9900% on just a nickel expended – but first we have a dagger to pull out of Philip Morris.

Take out your pens and paper, friends, ‘cause it goes like this –

The trade arrived on January 20th and was headlined: Tobacco, Anyone? Philip Morris Spurts Carcinomic Geyser.  There, we recommended you sell the PM June 17th 100/105 CALL spread for $2.00 and buy the PM June 17th 100/95 PUT spread for $2.05.  Total debit was $0.05.

And now…?

The CALL spread can be repurchased for $0.86 (1.46/0.60), and we advise you do it.

The PUT spread is worth $2.95 (12.95/10.00), and we say sell it.

When all is said and done, you walk with $2.04 NET on just a nickel expended.

And that’s a very clean 4080%.

In fifty days.

Rock solid.

LUNGS!

Good on subscriber Arjun, who closed out before the weekend AND took on multiple units of the trade.

Now it’s everyone else’s turn.

————————————–

We’re stalking integrated energy champ Chevron Corp. (NYSE:CVX) today, because you can never lube the engine of a cash-making roadster like ours often enough.

And here’s why we’re doing it:

Fundamentally, the stock trades with –

  • A Price/Earnings ratio of 21.01,
  • A Dividend Yield of 3.32%,
  • A Price to Book ratio of 2.35 (so far, so good, relatively speaking), but:
  • Price to Cash is elevated at 57.75, and
  • Price to Free Cash Flow is 29.92.
  • EPS next year are expected to FALL by 11.98%, and
  • EPS for the next five years are expected to FALL by 4.90%! (According to consensus estimates.)

  • But the kicker is as follows: Insiders dumped 64.37% of their shares in the last half year – for a grand total windfall of $156 million!  And a full $113 million of that sum was pocketed since the oil rally breakout began at New Year’s.

Whoops!

That may be why just three days ago, J.P. Morgan downgraded the stock from Neutral to Underweight.

Now look at six months’ worth of price action –

Technically, we’re in uncharted territory (forgive the pun) –

  1. First, CVX is now posting its highest ever DAILY and WEEKLY volume figures.  With March not yet half over, it’s very likely we’ll break the MONTHLY volume record as well.  What’s it mean?  Turnover of this magnitude always implies a changing of the guard.  ‘Distribution’ is Wall Street’s euphemism for it; it means the selling is manic, and stupid money is going to be left holding the bag.
  2. The company is also posting its highest ever DAILY and WEEKLY RSI and MACD readings.  Again, with month’s end, we’ll probably get record MONTHLY indications, too.  And what’s that mean?  Very simply, the stock has never before been subject to such bullishness.  That is, it’s topping and will likely spill lower for some time to come.  Insider action confirms the thesis.
  3. The chart also presents the greatest ever separation between price and her salient moving averages.  Almost 40 years of data show CVX is now breathing nothing but ionospheric vapors.  It won’t last long.  Gravity and the need for oxygen always prevail.
  4. As mentioned, daily (and weekly) RSI are overbought (in green), and
  5. MACD has begun its roll lower.
  6. A 35% rise in price in just ten trading sessions (in red) should have everyone doing a double-take – decide if you’re in or out, Freddy.  This one’s gone berserk.
  7. A gap at $144.80 (in blue) needs filling.
  8. And that level also aligns perfectly with a simple Fibonacci retracement calculation (in purple).

And that means we’ve got a trade.

A Jew and His Money recommends you consider selling the CVX April 14th 170/175 CALL spread* for a credit of $1.95 (8.75/6.80) and buying the CVX April 14th 165/160 PUT spread** for $2.00 (5.90/3.90).  Total debit on the affair is a nickel.

[*Sell the 170 CALL and buy the 175 CALL.  **Buy the 165 PUT and sell the 160 PUT.]

Rationale: fallen in love yet?  For a nickel, you stand to profit a full $4.95.  That’s a gain of 9900%.

Max loss is $5.05 (difference between the CALL strikes plus the initial debit).

Breakeven on the trade comes with a decline to $164.95 (a drop of 3.4%).

The full brisket is brought home with a decline of just 6.3%.

But it’s all in the Al-mighty’s hands.

All, of course, except fear of the Al-mighty.

May you keep the mitzvot, good Jews and Loyal Noahides – each his own – and see yourself through to that great and glorious Day of Judgment.

When He will be One and His name will be One.

With kind regards,

Hugh L. O’Haynew

 

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