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Two Closing For Some Healthy Scratch: 227% & 733%! And the Evils of Halliburton, Episode #244 (HAL, AOS, F)

Posted on February 14, 2022

We’re going to play our luck against the soulless Freemason connivers at Halliburton today (NYSE:HAL), because as evil goes, there are few who can top them.

Well, maybe Yonatan Eybschutz… but it’s a close call.

Anyway, we’ll get to the trade in a jif, but first we have two lovelies to escort down the aisle for big cash.

Hope you fared well with both of them.

We start with our AOS trade, conceived in a missive entitled Plumbing for Profits… on November 24th of last year.

The trade encouraged you to sell the AOS April 14th 80/85 CALL spread credit for $2.00 and buy the AOS April 14th 85/80 PUT spread for $2.90.  Total debit was $0.90.

And now…?

The CALL spread can be repurchased for $0.65 (0.90/0.25) and the PUT spread sold for $3.60 (13.70/10.10).

Do it, and you saunter off gingerly with $2.05 NET on a $0.90 outlay.

And that constitutes a profit of 227%.

Not Bad For a Guy Who Used to Dance For a Living!

Next up is our Ford initiative from November 8th.  The communiqué was entitled Hey! Look at That Ford Swerve!, and it urged a short sale of F at $19.29 and the concurrent purchase of a protective F January 21st 24 CALL for $0.49.  Total credit on the trade was $18.80.

When the CALL expired, by the way, we set a STOP buy on the shares at 25.

And today?

With F trading for $17.55, we’re recommending you wrap it up.

Buy back the shares (and cancel the STOP), and you take home $1.25 on ZILCH laid out.

Adjusted for minimal commissions gives you a return of 733%.

And that’s a pick-up as good as any F-150 out there.

And now to today’s wunderbar, risk-defined winning initiative.

As mentioned, it’s the devils at Halliburton (NYSE:HAL) that we’re up against, and don’tcha know it’s about time they got their come-uppance.

This is a company, by the way, that builds torture centers in foreign countries for the U.S. Government, has no regard for collateral environmental damage caused by its businesses and is regularly awarded no-bid ‘rebuilding’ contracts in lands the U.S. military destroyed.

Friendly Lads, They Are!

Here are some fundamentals –

  • Price/Earnings is high, on an absolute basis, at 20.55 – even if that passes as reasonable in this market.
  • Dividend Yield is almost non-existent at 0.54%,
  • Price to Book is a scandalously Al-Ghraibish 4.47, and
  • Debt/Equity is a bloated 1.38.

Yes, the company works hand-in-glove with the military-industrial complex to advance the deep state agenda, and yes, that means bottomless budgets and fat contracts.

But every devil has his day, and we believe that HAL’s about to trip up.

Take a look at her chart –

Technically, there’s a good bit to unpack, and it starts with –

  1. A 62% price gain in two months – the stuff of fairy tales… where children get eaten by wolves.
  2. That fable gave rise to a sizable gap at 24 (in blue) that will have to be filled, and more recently…
  3. A bearish rising wedge pattern (in red).  When price closes below the lower trendline of the wedge, the selling will accelerate.  Expect it.
  4. Volumes surged as new highs were registered (in black), indicating potential distributive activity on the part of the bulls.
  5. And lastly, for 30 days RSI has been playing a game of Damoclean chicken with her overbought 80 line (in green), an indication that a top is imminent and a sharp turn lower in the works.
  6. MACD’s roll lower could happen as soon as today.
  7. Should that happen, simple Fibonacci retracement calculations see price at 28, and in a worst case to 24 (in purple).  That latter level is also where the gap resides.

All of which render the following a must-take for all you Guantanamo-haters.

A Jew and His Money recommends you consider selling the HAL April 14th 32/34 CALL spread* for a credit of $0.95 (3.25/2.30) and buying the HAL April 14th 34/32 PUT spread** for $1.02 (2.85/1.83).  Total debit on the trade is $0.07.

[*Sell the 32 CALL and buy the 34 CALL.  **Buy the 34 PUT and sell the 32 PUT.]

Rationale: we like the entry price on this one, made possible by some reasonably tight spreads on the options.

It gives us a chance to pocket $1.93 on a seven cent outlay – for a max win of 2757%!

Max loss is a modest $2.07 (difference between the CALL strikes plus the initial debit).  For that to happen, though, price would have to pop out of the rising wedge to the upside – an extraordinarily unlikely proposition, in our view, though theoretically possible.

Additionally, the trade requires just a 4.5% pullback in the next 60 days to max out our profit.  Hell, it doesn’t even have to decline to the short-term moving average (in brown, above)!

All told, a shama-lama-ding-dong set-up.

May the Lord Of Hosts destroy all Workers of Iniquity.

And may He do it soon…

With kind regards,

Hugh L. O’Haynew

 

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