בס״ד

February OPEX is Up! And Here’s the Lowdown… (LMT, TWNK, CSL, PH, ADT, XLU/XLF, CHD, LKQ, HD, UPS, TPR, XLF, FCX)

Posted on February 18, 2022

There’s a lot going right in the world today, good Jews.  But it’s unlikely you’ll hear about it.

Why?

Because there’s a confluence of interests that binds big government, big media, Silicon Valley and the Deep State that wants to keep you locked in perpetual fear and zombie-like addiction to your handsets.

You’re even being irradiated as you consume the virtual reality that’s being fed to you!

And in the meantime, your children go in want.

Solutions, Man!

We’ll speak more of the solution to the issue shortly.

In the meantime, expect more of the same – a ramping up of the general panic surrounding Russia, global warming, new viruses (including bird flus), and many more.

It’s all tripe and hysterics.

Don’t believe the hype.

We start with our LMT trade of February 2nd.  The letter was called Turtleneck Decked Canuck Rednecks… (for whom, incidentally, we have nothing but respect), and it urged you to sell the LMT February 18th 385/390 CALL spread for $2.10 and buy the LMT February 18th 385/380 PUT spread for $2.20.  Total debit was $0.10.

And now…?

The stock closed last eve at $388.77, but general momentum in the market is clearly lower and expiration Fridays are often volatile.

It’s our inclination to leave things be for the moment (our loss is capped at $5.10) – and see what the existing downward pressure will afford us.  Futures are now flattish to slightly higher.

It’s very likely that if we take a loss, we’ll immediately reinstate the trade next week.

Stay tuned.

NEXT!!!

Our January 10th trade arrived in a missive called We Push Our Blood Sugar to the Limit! and featured TWNK.  The recommendation was to sell the February 18th 20.00/22.50 CALL spread for $0.55 and buy the TWNK February 18th 20 PUT for $0.65.  Total debit on the trade was $0.10.

Today, TWNK trades for $21.06, meaning we’re likely to be on the hook for about a buck if nothing happens.

But we’re of a mind that downward pressure will mitigate that sum further, and may even put the trade into positive territory by day’s end.

Leave her be.

We’ll report Monday on final outcomes.

Carlisle Faces the Whirlwind arrived at your inbox on December 27th and urged you to sell the CSL February 18th 230/240 CALL spread for $3.60 and buy the CSL February 18th 240/230 PUT spread for $5.90.  Total debit on the trade was $2.30.

CSL is now beginning its roll lower, but still sits midway between our spreads, at $235.18.

We’re going to let the market push where it will today and leave CSL be.

If we get a solid downdraft, as we verily believe, look for a modest profit by the close.

More to come next week.

Moving On…

Our PH initiative was entitled Forget About Nozzles, Ducting &tc. and called on you to sell the PH February 18th 290/300 CALL spread for $5.20 and buy the PH 300/290 PUT spread for $4.50.  Total credit was $0.70.

The stock is now on the verge of breaking, but is still playing at support at $303.

That’s going to put us on the hook for roughly $9.00 at the close, so we’re acting thus –

We’re setting the PH April 14th 290 synthetic short for a credit of $12.70 (22.00/9.30).  That will flip our existing debit to a credit of roughly $3.70.

Full details on Monday.

Our ADT trade of December 16th is in-the-money profitable, and we’re closing her today.

The dispatch was called The Smash and Grab Future of ADT, and it beseeched you to set the ADT February 18th synthetic short using the 9.00 strike.  Total debit was $1.10.

We also urged you to set a STOP buy at $9.50 to cap any losses.

ADT is now trading at $7.62.

So…

Cancel the STOP and close out the short and you step clean with $0.28 NET on $1.10 spent.

And that’s a modest 25% profit.

It’ll have to do.

Onward, Ho!

Our CHD trade, the details of which can be found HERE, can be summed as follows –

We’re holding a debit of $3.45 and a short 100/105 CALL spread expiring tonight.

With the CALL spread almost certain to expire OTM, we’re facing that ugly $3.45.

And yet CHD looks ready to dump at least another 5%.

So we’re acting as follows –

We’re setting the CHD March 18th 90 synthetic short for a credit of $6.45 (7.10/0.65).

That will turn our current debit into a credit of $3.00 and open the downside to full profits.

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The details of our XLU/XLF endeavor can be accessed HERE.

In brief, we’re now in possession of a debit of $0.72 and an XLF synthetic short with a 38 strike.

XLF is trading at $39.23, which means we stand to lose an additional buck by the close if nothing changes.

To that end, we’re prudently suggesting you reset the XLF March 18th 37 synthetic short for a credit of $2.06 (2.57/0.51).  That will change the debit to a credit of roughly $0.30 (more precision after the close) and allow us to participate on the downside.

Our LKQ trade is on track to bear some de-luscious fruit.

Details of the trade can be found HERE.

In sum, we’re short one lot of LKQ with a breakeven at $45.98.  We’re also holding a long 55 CALL that withers this eve.

With the stock now falling like a wet boot (14% yesterday!), we’re going to leave everything in place.

We’re very close to pulling a nice bit o’scratch from this one.

Stay tuned.

Keep ‘em coming!

Details of our HD trade can be sourced HERE, and speak of a short sale of stock with a breakeven at $311.09 and a long protective CALL at 345 that expires tonight.

Again, leave everything as is.

The CALL may produce a small profit (price closed at $347 and change last night).

If necessary, we’ll reset a new protective CALL next week.

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UPS needs attention, too.  Her particulars can be found HERE.

All told, we’ve got a short sale with a breakeven at $178.20.

UPS has declined better than 10% in the last twelve sessions, and we say there’s more to come.

Leave her be.  On Monday we’ll set a protective CALL, if need be.

Look HERE for details on our TPR bet.

Basically, we’ve got an open 37.50 synthetic short expiring tonight and a debit of $2.90.

With the stock now at $39.85 and looking like it’s about to buckle, we’re recommending you set the TPR May 20th synthetic short at 35 for a credit of $4.30 (6.10/1.80).  That will reduce our debit to approximately $0.50 (we’ll know precisely after the close) and leave the downside open to big gains.

More next week.

———————————-

We’ve an open XLF trade whose details can be sourced HERE.

Bottom line is we’re short a lot of XLF with a breakeven of $31.85.

Action required: leave her be.  The market is trembling.

We’ll revisit next week.

And lastly…

We’re holding a synthetic short on FCX at 34 that expires tonight.  We’re also in possession of a debit of $1.52 on the trade.

And…

At the close, we’ll likely see our debit rise to roughly $10.50 (precise numbers after the close).

We’re therefore acting thus –

We’re setting the FCX April 14th 33 synthetic short for a credit of $10.06 (10.60/0.54), thereby reducing our debit to the $0.40 range (exact numbers after the close) while opening the downside to profits.

May the G-d of Israel bring us the final redemption b’rachamim

and destroy the evil ones before our eyes.

Eschatologically yours,

Alan B. Harvard

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