Posted on November 18, 2022
We start the rundown today with our LMT trade that arrived in your inbox on October 31st in a letter called Fly Me to the Moon on a Hypersonic ICBM…
There, we urged you to sell the LMT November 18th 500/505 CALL spread credit for $1.10 and buy the LMT November 18th 460/455 PUT spread for $1.20. Total debit on the affair was $0.10.
With the shares closing last night at $472.77, chances are everything will expire worthless and we’ll be out our initial dime on the transaction.
That said, there’s an outside chance we’ll get a steep tumble in price, and the long PUT will end in-the-money by a scratch.
We stress OUTSIDE.
Our BJ/VOD pairing was sent October 3rd in a dispatch entitled A Tale of Two Equities.
There, we recommended you sell the BJ November 18th 70/75 CALL spread for $2.20 buy 3 VOD January 20th 10/11 CALL spreads for $0.74 each. Total debit was $0.02.
Today the BJ side of the trade expires (VOD still has two months).
With BJ showing tremendous weakness—but not quite enough (the stock was down almost 9% intraday, but closed down by just 5.55%), we have to act.
With S&P futures flat to slightly lower, our short CALL spread will likely end up $4.00 in-the-money.
To offset any potential loss we’re:
That will put us in a credit position of roughly $1.11 (exact numbers after the close), with one short BJ spread in hand.
Blackout—Solar Panels Fail… contained our FSLR initiative of September 12th.
The trade had you sell the FSLR November 18th 135/140 CALL spread for $2.10 and buy the FSLR November 18th 100 PUT for $2.04. Total credit on the bet was $0.06.
Today, our short FSLR CALL spread is in-the-money for the full $5.00 value and therefore requires repair.
Set the FSLR January 20th 160 synthetic short* for a credit of $5.55 (16.80/11.25).
That will flip the debit to a credit of $0.61 and offer us another two months to profit from FSLR’s downside.
On August 22nd, When the Towers Tumble Again brought you our ACM trade.
There, we recommended you sell the ACM November 18th 75/80 CALL spread for $1.80 and buy the ACM November 18th 77.50/75 PUT spread for $1.90. Total debit on the trade was $0.10.
Today, ACM opens at $78.67, meaning we’re on the hook for at least part of the short CALL spread.
ACTION: set the ACM January 77.50 strike synthetic short* for a credit of $1.30 (4.40/3.10).
That will reduce our debit to roughly $2.47 (more precise numbers at the closing bell) and give us two more months to profit from the downside.
Our CXM trade details can be found HERE.
In brief, we’re holding a debit of $2.15 and the 10 strike CXM synthetic short expiring this eve.
With CXM closing last eve at $8.33, we’re still $0.48 away from breaking even.
So we’re acting thus—
Set the CXM February 17th synthetic short* with the 7.50 strike for a credit of $0.75 (1.50/0.75).
That will put us into a credit position on the trade of roughly $0.30 (exact numbers after the bell) and three months to profit from CXM’s weakness.
The particulars of our AEO initiative can be had HERE.
Essentially, we’re holding one lot of shares with a breakeven of $15.57, but price is only at $12.56 as of last night’s close.
AEO is showing significant strength of late, than G-d, so we’re going to sell premium to reduce our adjusted cost base for the shares and (eventually) with G-d’s help pull out a nice win.
Sell the AEO February 17th 15 CALL for $0.62.
That reduces our breakeven to $14.95, and sets us on a path to Bo Diddley stardom.
The run-down on our ABBV venture can be found HERE.
Bottom line is we’re holding a debit of $4.90 and a short 155 CALL expiring this eve.
And that means…
We’ve still got to cover the outstanding debit.
ACTION: set the January 20th ABBV 145 synthetic short* for $6.95 (10.65/3.70).
That flips our debit to a credit of $2.05, and leaves us in the running to profit from weakness.
Finally, our XOM number, whose details can be accessed HERE, sees us with a debit of $0.60 and the 82.50 synthetic short expiring this eve.
As we’re underwater with the short CALL, we’re acting thus—
We’re re-setting the XOM April 21st 82.50 synthetic short* for a credit of $31.04 (32.45/1.41). That will bring us very close to breakeven and open the downside to further gains.
Full details after the bell.
May the good Lord bring us through these end times safely.
Alan B. Harvard