Short on Bread?  Need Some Dough?  Flowers Bakery Offers Massive Leverage… And We Nail Kellogg’s For 367% (FLO, K)

You’re not going to believe this, but today’s trade takes advantage of some wild pricing to offer you a maximum take of $250.30 on NOTHING SPENT!

L – E – V – E – R – A – G – E

And it’s risk defined; so we’ve got a known downside.

But before we get there, we have one to close for a very respectable 367%.

Will do, Junior…

It’s all about our K trade, launched back on August 29^th in a letter called Kellogg’s Diagnosed Lactose Intolerant; Stock Ulcerates, Suffers Gastric Event.

There, we urged you to sell the K December 16^th 72.50/75 CALL spread for $1.05 and buy the K December 16^th 72.50/70 PUT spread for $1.05.  Zero premium was the result.

And now…?

Well, the CALL spread can be repurchased for $0.65 (1.05/0.40) and the PUT spread sold for $1.35 (3.90/2.55).

Get it done and you NET $0.70 on nothing laid out.

Accounting for minimal commissions gives you a nice 367% win.

And that’s better than a bowl of cold porridge.

Congrats to our friend, Sunil, for going in big (again).

Flowers Foods (NYSE:FLO) is responsible for Wonder Bread, among the rest of its all-star line-up of baked goods.

And today it also boasts some wonderfully aromatic options prices, that could pay off in an extraordinarily carbohydrate-rich profit serving—if we’re right.

But let’s look at some fundamentals before we get to the trade.

Fundamentally Ill

• FLO’s got a P/E of 27.96 – and she’s a bread company, not a vaccine manufacturer.  Analysts expect that figure to contract to 21.09 by next November.  That is, lop off a quarter of the price.
• Dividend Yield is generous at 3.09%, but…
• Price to book is a bit yeasty at 4.18.
• Beyond that, the company’s EPS grew at 4.40% for the last five years and…
• Are expected to grow at just 3.21% over the next five, so…

It’s hard to imagine how the stock price is going to stay so hot-out-of-the-oven.

With the company set to report Q3 2022 financial results this Thursday (November 10^th) after the close, we’re recommending a full-on defensive rush for shareholders.

By the way, we picked the Flower back in January of this year for a healthy win, when price was hovering just about exactly where it is now.

And now we’re pulling a repeat.

She Loves Me… She Loves Me Not…

Now to the charts –

Only G-d in Heaven guides us, fellow Jews and Noahides.

Hop on for the ride.

With kind regards,

Hugh L. O’Haynew

Follow @HughLOHaynew