Posted on June 9, 2020
No time to waste!
We start with our FAS/KRE pairing from April 24th, Pyrotechnical Analysis – Financials on Fire! In that communiqué, we urged you to buy the FAS June 26th 28 CALL for $2.84 and sell the KRE June 26th 34.50 CALL for $1.85. Total debit on the trade was $0.99.
And now we’re ready to jump.
The long FAS CALL fetches $15.00 and the short KRE gets $11.90. Sell the former and buy back the latter and you exit with a tidy net $3.10 on $0.99 spent.
That’s 313% in six weeks, and it smells like a barbecued Montana T-bone, however you cut it.
Turning to our grocery pairing that arrived in your inbox on March 25th (It’s a Supermarket Standoff!) – remember: we recommended you buy KR shares (then at $30.15) and sell GO shares (then $33.20) in equal numbers, for a credit of $3.05 per lot traded.
Today, KR goes for $33.01 and GO sells for $33.04. Sell the former and buy back the latter and you net $3.02 on nothing laid out. Adjusted for minimal commissions gives you a profit of 2013% in ten weeks!
Take it to the check-out, Harmon!
Third trade on the docket is our UUP/GDX trade of April 20th that didn’t fare as well.
Both sides ended up getting stopped out, and we took a hit of $3.76 on the affair ($2.99 on the GDX side and $0.77 on UUP).
Even the Jim-Dandy gets it in the solar plexus once in a while.
On April 29th we sent you a directive called Faster Than a Speeding Pullet, in which we outlined our WING/KO pairing. The report suggested you sell the WING June 19th 120 CALL for $10.30 and buy the WING June 19th 125 CALL for $8.90 (credit $1.40). Then, use the proceeds to buy five (5) KO June 19th 52.50 CALLs for $0.28 each (debit $1.40). Zero premium was the result.
The trade looks fine, but because we’re concerned about an imminent broad market reversal, we’re recommending you close your long KO CALLs today. They’re trading for $0.16 each. Sell ‘em all and you pocket $0.80 (for the time being).
We’ll keep you posted regarding any need for action on the WING side.
Our Forefathers, Mo and Sam, Enjoyed the Occasional Beer was sent out on May 3rd, and it recommended you consider selling the SAM September 18th 490 CALL for $35.40 and buying the SAM September 18th 500 CALL for $33.30 (credit $2.10). With those funds, we suggested the purchase of an MO September 18th 40 CALL for $2.85. Total debit on the affair was $0.75.
As we did in the WING/KO bet (above), so we’re doing here.
Take profits today on the long MO CALL and leave the SAM spread to rot.
It’s already begun its descent.
The MO 40 sells for $3.75.
That’s all folks!
Alan B. Harvard