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Take a Gander at Two Wondrous Wins – 1700% and 1858%; Then Consider a Potential 2567% – ‘Cause I’m the Tax man…’ (HRB, ADM, TLT)

Posted on July 25, 2022

The July options expiry saw our HRB trade bleed $2.00, and that hasn’t sat well with us.

That said, the good Lord works in strange and wondrous ways – and He’s brought us a set-up today using the self-same HRB that’s looks far more lucrative than our first go-round, and will handily cover for the loss – if we’re right.

It holds a potential take of 2567%, and we’ve made a point of structuring the trade to account for both initial costs and potential back-end gains – with the risk fully defined, as always – that we think you’ll be overjoyed to see.

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We’ll get there in a moment.  But first, we have two other initiatives that require your attention – both for the good!

The first involves our ADM trade, which you’ll remember we already closed HERE.

That’s right, Mr. evil communist mainland-China propaganda character.

Well, sort of…

We left one short 90 CALL with a September 16th expiry open, because we figured the stock had sunk so low that it wasn’t in jeopardy.

But today, with the option trading for just $0.20, we’re invoking ‘prudence is the better part of valor’, and buying it back.

Get it done, and you lower your NET profit on the trade from $1.90 to $1.70 (and your percentage gain from 1900% to 1700%).

Nebuch!

We’ve got another fine profit on the table from our TLT initiative, whose particulars you can find HERE.

In brief, we’re holding the September 16th 115 synthetic long and a debit of $1.12.

And…?

The short can now be closed for a gain of $3.35 (sell the CALL for $5.45 and buy back the PUT for $2.10) and you come away with a NET gain of $2.23 on just $0.12 originally laid out.

And that’s a spanking new Edsel in your driveway, Roy.

Call it –

1858%!

And now to our tax collector friends at H&R Block (NYS:HRB).

Such he-men…

As mentioned above, at July expiry we were in the red for a full $2.00 on our short CALL spread, but today we’re re-engaging the enemy in the mid-day sun with far greater fire-power.

Tactical Retreat and Counter-Attack

Let’s run through the HRB fundamentals once again, because it’s hard to imagine a stock can continue drifting higher with figures such as these –

  • P/E is 31.78, while forward P/E is just 12.05 – indicating a less than favorable outlook going forward from analysts.
  • Dividend Yield is a reasonable 2.85% per annum, but
  • Price to Book is a clot-inducing 135.54!
  • And Debt to Equity is an aorta-plugging 44.23!  How the hell does this sort of thing happen?
  • The company’s EPS was DOWN this year by 84.20%,
  • Is expected to be DOWN another 9.01% next year,
  • Was DOWN on average 24.20% annually for the last five years,
  • But posted a single Q/Q gain that put everyone on bennies.

Next earnings are set to be released August 9th, and frankly, we’re looking forward to them.

This sort of chicanery needs a strong response.

Guillotines, slipknots and the like.

Meanwhile, here’s the chart –

May the Holy One bless us with the insight and bearings to make it spin right.

With kind regards,

Hugh L. O’Haynew

 

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