Posted on June 21, 2021
We can barely catch our breath with all this money flying around!
So let’s get to it.
We’re closing down a bevy, and we’re starting out with LEVI.
Our LEVI trade was opened four weeks ago in a letter called The Jeanie’s Out of The Bottle.
The recommendation was to set the LEVI October 15th 31 synthetic short for a debit of $4.20.
And today, we’re very nicely in the black.
The short 31 CALL goes for $0.60. Buy it back. The long 31 PUT sells for $6.80. Dump it.
And in so doing, you fetch $6.20 gross on just $4.20 laid out.
That’s a NET gain of 47% (two hundred bucks!) in just under a month.
So who needs drive thru?
Next up is our AVY bet, set on the 6th of May in a missive called Avery Dennison Takes the Last Dance.
There, we directed you to sell the AVY October 15th 220 CALL for $11.10 and buy the AVY October 15th 230 PUT for $25.30. Total debit was $14.20.
Fine and dandy.
Because today, the CALL sells for $8.00, and the PUT goes for $27.50.
Buy back the first and sell off the second, and you walk with $19.50 on $14.20 spent. That’s a net gain of $5.30 (37%!) in just two flippin’ weeks!
FIVE HUNDRED AND THIRTY BUCKS, BRO!
Our XHB initiative from April 22nd arrived in a package called Framing a Building Collapse. There we urged you to sell the XHB September 17th 80 CALL for $1.75 and buy the XHB September 17th 66 PUT for $1.85. Total debit was $0.10.
And whaddaya know, today the CALL is priced at $0.65 and the PUT is at $1.20. Sell the former, buy back the latter and step into that vintage Bentley convertible with $0.45 net on just $0.10 spent.
That’s a rip-roaring 450% in 60 days, and you know it don’t come easy…
Congrats to subscribers Sunil and the Family Katz for going in big on this one.
On April 12th our ATKR trade graced your inbox in a communiqué called Hey, Kids! Look What Happens When You Stick a Screwdriver Into a Plug Socket! The idea was to set the ATKR October 15th 75 synthetic short for a debit of $3.50.
And then wait.
But not for too long.
Because today that critter is ripe.
The short 75 CALL trades for $4.40 and the long 75 PUT goes for $10.80.
Buy back the first and sell the second, and the IRS has got you in its crosshairs, baby!
You pocket $6.40 on $3.50 tossed out, and that’s a NET return of 83% (TWO HUNDRED AND NINETY BUCKERINOS!) in just ten weeks!
RCII closes out our winners for the day. That directive arrived on March 29th in Rent-A-Loser And Win, and urged the purchase of the RCII September 17th 55 PUT for $6.30 and sale of the RCII September 17th 60 CALL for $5.70. Total debit was $0.60.
The G-d of Heaven and Earth is smiling.
The short CALL is worth $2.50 – buy it back. The long PUT sells for $5.00 even. Sell it off.
That gives you $2.50 gross on just $0.60 anted up.
And that amounts to a very fine 316%.
And again, for all of you who doubled, tripled and nth degreed this one, a hearty Mazel Tov.
We’re returning to the scene of the crime today to reinstate our Valmont Industries (NYSE:VMI) trade.
You’ll recall that last Friday we closed our VMI initiative for a breakeven result, as June expiry was hammering down upon us, and our options – as it were – became limited.
If you chose to ride VMI through the end of the day, you made some tidy scratch. But we couldn’t.
As we wrote –
If you feel there’s more downside to come (VMI has tanked close to 15% in the last two weeks), feel free to take your chances and leave the trade until the close – or to some point of intraday weakness – and close for a more meaningful sandwich.
Congrats to all who travelled that road.
And for those who missed it, congrats to you, too – because today we’re taking another stab at it!
Essentially, because VMI’s presently in the middle of a free-fall, and we were forced to close out prematurely because Shabbat preparations prevented us from getting to market on Friday.
Ahh, the good life of a Jew.
Here’s the chart –
Technically, we’ve only just begun –
That would suggest a drop of some 18%.
And that’s what we’re betting on.
The trade is going out today to all our readers as a special summertime gift for parashat Balak.
But know it, too – the trade is also SPECULATIVE in nature –
A Jew and His Money recommends you consider selling the VMI July 16th 210/220 CALL spread* for a credit of $3.90 (11.50/7.60). Then, purchase the VMI July 16th 220/210 PUT spread** for a debit of $5.25 (7.50/2.25). Total debit on the trade is $1.35.
Rationale: We’ve boxed in Monsieur Valmont here beautifully.
For an initial outlay of just $1.35, we’ve purchased the potential for an $8.65 payday (maximum gain).
Maximum loss on the trade is $11.35 (difference between the CALL strikes plus initial debit), a prospect we view as highly unlikely.
Breakeven arrives at $214.32.
The trade is speculative, essentially, because time to expiry is so limited. The market doesn’t give the stock much of a chance to fall to 210 by July 16th.
But we do.
And G-d decides.
Not Mssrs. Black-Scholes.
With kind regards,
Hugh L. O’Haynew