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Tuesday, February 27, 2024

Top Trade Tuesday – Q3 2020

Our Top Trade Alerts are very popular. 

That's not surprising since, in the first half of 2020, we had 27 out of 28 winning trades that made $503,547 as of our last review.  That's a very successful set of trades and that is, of course, completely untouched as we don't go back and adjust Top Trade Alerts - they are high-value plays that are meant to stand on their own - though many of them do go into our Member Portfolios, of course.  

Top Trade Reviews are very useful when you are looking for trade ideas to fill in portfolio gaps.  Looking at the last review, I see IMAX has sold off again (Delta virus), HMY (Gold pullback), BBBY,  CAKE (Delta) and  ALK (Delta).  PRESTO!  We have a new watch list.  Now we can go back and see if the Fundamentals of our recently-winning stocks have actually changed or it's just the sentiment.  

As you know, we've been very cautious with our picks in the past month as we have been worried about the Delta Virus (and all the other varients still to come).  Covid may be like the Flu, it will hit us year after year and we'll just get used to 0.1% of our population dying each year - as opposed to 0.02% currently killed by the flu.  It's still a lot less than Cancer or Heart Disease as a cause of death - and people still smoke, drink and eat bad foods..

Top Trades for Thu, 23 Jul 2020 10:19 – T

Finally a Top Trade Alert!  T pays a $2.08 dividend at 0.52/quarter so it's great to own the stock but it also means we can just be aggressive in establishing a position since we'd be happy to own it, right?

  • Sell 10 T 2022 $28 puts for $3.75 ($3,750) 
  • Buy 30 T 2022 $25 calls for $5.60 ($16,800)
  • Sell 30 T 2022 $30 calls for $2.80 ($8,400) 
  • Sell 5 T Sept $30 calls for $1 ($500) 

That's net $4,150 on the $15,000 spread so we've got $10,850 (261%) of upside potential if T can simply hold $30 for 18 months and, if it can't, we're selling $500 in the first 57 out of 547 days of this trade so we have a chance to collect another $5,000 to further soften the blow of owning 1,000 shares of T at net $32.15 (assuming the trade is completely wiped out and you are assigned at $28)

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