Posted on June 12, 2022
The Holy One, Blessed Be He, has afforded us a trade today that capitalizes on some excellent pricing features – and could deliver 2900% on a rather modest move in the underlying…
So let’s at it!
Colorado’s Pilgrim’s Pride (NYSE:PPC) was Wall Street’s flavor of the day while news of the Avian Flu was spreading, and the foul and senseless slaughter of the country’s fowl gained speed.
But it never takes long for these things to get overdone – bar-b-charred, even – and PPC is no exception.
We’re going to examine the best way to cook up Pilgrim’s Pride (and add a little seasoning while we’re at it), but first we have a trade to close.
We’re shutting down our Deere (NYSE:DE) initiative today. All her details can be found HERE.
To sum, we’re now in possession of two short DE 330 CALLs that expire next Friday and a credit of $24.08.
The CALLs sell for $11.35 each, and we’re recommending you repurchase them now.
Yes, we could hold for a better price – who knows? – they might even expire worthless!
But they also may not.
So buy them back (please) and exit with $1.38 NET on an initial expenditure of $1.75.
And that’s a dandy 78%.
Pilgrim’s Pride has profited abundantly from the reduced supply/higher inflation dynamic of the last year, thus far avoiding any of the aforementioned Avian bird infection.
That said, a number of former PPC execs were recently indicted in a price-fixing scandal that will most certainly reduce the company’s cock-a-doodle-do.
In fact, the shares already appear to be losing some of their honey-garlic.
But before we get to the tell-all chart, consider the following –
Then take a peek at the chart –
This is the daily PPC paste-up for the last six months.
And technically it offers the following –
Our trade doesn’t require all that downside to maximize winnings, though. A relatively modest move will deliver the full brood of 2900%.
Check it out –
A Jew and His Money recommends you consider selling the PPC July 15th 29/32 CALL spread* for a credit of $1.20 (2.15/0.95) and buying the PPC July 15th 31/28 PUT spread** for $1.30 (1.80/0.50). Total debit on the affair is $0.10.
Rationale: we’re looking at a NET $2.90 take from a $0.10 investment, and that makes for a cool 2900% if we’re right.
Breakeven on the trade is $29.90, just 1.6% below the current price.
After that, the cash runs like a chicken with its head cut off.
Couldn’t help ourselves.
With kind regards,
Hugh L. O’Haynew