Posted on October 23, 2019
Today we have three trades to report on – all from McAbby’s A Jew and His Gold – and His Majesty will be pleased to know they all fared favorably.
So, to begin, let’s have a look at our X/NUE pairing, a sojourn into the world of American steelmakers that we launched back on July 18th.
The letter was called Steel Pair Profits, Side By Each, and there we urged you to buy the X October 18th 18 CALL for $0.45 and sell the NUE October 18th 62.50 CALL for $0.45. Zero premium was the result.
And on expiry?
Both options ended worthless, m’Lord.
No gain, but no slipped disc, either.
Next up was our June 20th initiative from a letter called Fire in the Vatican.
The recommendation was to sell the SMG July 19th 100 CALL for $1.95 and buy the SMG July 19th 105 CALL for $0.55, for a credit of $1.40. We then used those funds to buy the SMG July 19th 95 PUT for $1.30. Total credit on the affair was $0.10.
Unfortunately, it didn’t pan out, and we were left short one lot of SMG shares at 100 – against which we subsequently sold an SMG OCT 18th PUT for $1.35.
Last week that option expired worthless.
And that’s where we’re going to end it.
Yes, SMG looks weak, but we’re not going to risk holding out any longer.
The shares sell for $99.05 as we speak.
Buy them back and you’re up $95 on the stock and $145 from the options.
It’s a $240 take, and it beats a witch hazel compress on a fresh sunburn.
On October 2nd we sent you a letter called “I’m Sorry, Junior. But Ketchup is not a Food Group”, in which we called on you to sell two (2) KHC December 20th 25 PUTs for $0.85, and buy three (3) KHC December 20th 30 CALLs for $0.60. Total debit on the affair was $0.10.
Things have moved in the King’s favor!
The PUTs go for $0.55 and the CALLs for $0.83. Buy back the former and sell off the latter and you walk away with 1.29 on a dime expended. That’s a 1290% profit in a mere three weeks!
And that has all the sumptuous flavor and aromatic bliss of the Garden of Eden.
May we all merit to get there soon!
Alan B. Harvard