What a great stress-test!
It’s been 3 months since I was last on the show and we unveiled our 2026 Trade of the Year (PFE – spoilers) and, more importantly, our outlook for 2026 trading in general and, other than not predicting another US attack on Iran and the closure of the Strait of Hormuz – we nailed it!
The predictive power of the AGI Round Table Consulting Group was put to the test while still in Beta (yes, it’s only been 3 months since the most powerful superintelligences on Earth were integrated) and we distilled their outlook into one of our first Infographics:
And, as I said at the time: “And here is another nice infographic that sums up the selection process that reduced our Watch List (Members Only) down to our Top 20 candidates for the best stock of 2026:“
Thank goodness for that as we adopted a very defensive posture that has served us well the past 3 months (we can only make adjustments on show days) because, despite the turmoil, has GAINED $30,003 (8.6%) though we’ve depleted our cash position down to $128,015 (34%) as some of our short puts and calls expired in the money last week.
Nonetheless, the Money Talk Portfolio now stands at $376,440 and that is up 276.4% since our Aug 21st, 2024 restart at $100,000 – very nice gains for less than two years (so far). Still, as with all of our Member Portfolios at PhilStockWorld (join here so you don’t miss the fun!), our aim is to get “Cashy and Cautious” into Q1 earnings and Q2 guidance – as we’re not sure we believe the President is about to bring peace to the Middle East.
We picked 4 new trade ideas back on December 16th (the show aired the next day) and they were Energy Transfer (ET), Micron (MU), PPL Corp (PPL) and, of course, Pfizer (PFE) and we spent net $28,310 on the new trades and already, just 3 months later, they are at net $101,077 – up $72,767 (257%) in just 3 months! As I noted, we had to pay cash to cancel some of the short puts and calls but I think you can see what I mean when I say FUN!!!
Now I’m much more concerned with protecting our gains so we’re going to be defensive as we review the Money Talk Portfolio this morning:
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- ARCB – Well over our target at net $16,875 on the $22,500 spread but it’s annoying that they don’t have long-term options so let’s cash out while we’re ahead.
- MU – Net $68,000 on a $25,000 spread (it’s only partially covered is why) is too good not to cash out!
- AMAT – I’m not worried about the short Dec $150 puts (miles out of the money) so let’s sell 3 June $380 calls for $33 ($9,900) and 2 June $330 puts for $24 ($4,800) and that’s net $10,700 (21.6%) against our net $49,464 spread in just 86 days. Aren’t options fun?!?
This is how we pay ourselves nice, fat dividends on almost any stock. Well, not any stock – stocks that settle into a channel that we feel is close enough to what we consider to be their fair value where we also feel comfortable that there won’t be any catalysts (earnings, news, macro) that are likely to send them too far up or down in the range.
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- B – A huge pullback is handing us a paper loss ($10,397) but we can sell 20 June $37 calls for $4 ($8,000) and they can’t hurt us and we can sell 15 June $37 puts for $3.25 ($4,875) and that’s net $12,875 (50% of the net spread) for the quarter while we wait for gold prices to recover. We can also sell 10 2028 $40 puts for $10 ($10,000) as net $30 is a stupidly low price for 1,000 shares.
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- BCS – Banks may be under pressure if the war drags out but we can sell 7 June $20 calls for $2.30 ($1,610) and 5 June $20 puts for $1.40 ($700) and that’s net $2,310 (51.4%) against the net $4,487 spread and that’s not the kind of quarterly income we throw away out of fear – is it?
With any holding, the key question is “Am I ready, willing AND able to double down on this stock if it drops 20%?” BCS is trading at 6x forward earnings and is a solid bank so yes, I’d love to own 1,500 shares (the number of short puts) at $19 ($28,500), which would cost me $14,250 in ordinary margin and, if I can collect $2,310 (16.2%) per quarter against that – it’s still a great use of my cash!
That’s what’s behind these trades – logical assumptions made against risk/reward models using realistic valuation benchmarks. Weve been doing this for 20 years – AI just makes it faster!
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- ET – It’s a $25,000 spread well in the money at net $13,315 so we’ve got a double ahead of us if they hold $17 but, unfortunately, the June $20 calls are only 0.35 – so they aren’t worth selling (risk is more than reward) and I don’t want to hold anything we can’t draw an income from so we’ll cash this out – even though it’s a great stock.
- IVZ – Now here is a $30,000 spread at net $13,837 so more than a double if they make $25 but, in this case, while we wait we can sell 15 July $24 calls for $2.40 ($3,600) and 10 July $22 puts at $1.60 ($1,600) and that’s net $5,200 (37.5%) for 115 days (there are no June contracts). We will also buy back the short April puts and calls for $1,063 with a gain of $1,982.
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- LMT – It swings too much for us to sell short-term premium against so we’ll take the money and run.
- OZK – Fantastic regional bank and we’re going to simplify by buying back the short 2027 $52.50 calls for $2,525 and we’ll close the short April $47.50 calls at $825 with a $5,025 gain. I have faith in the short $45 puts (2 sets) and now we can sell 10 Aug $45 calls for $3.65 ($3,650) as they can’t hurt us as we’ve got 10 open long calls – so we may as well take the money!
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- PFE – Our Trade of the Year is already up $6,585 but we started with a net $3,390 credit, so we’re actually up $9,975 (294%) in our first 3 months PLUS we nailed the initial sale of March $26 puts and calls for $5,540 so mission accomplished on this one already! See my notes on PFE from December and you will see, in hindsight, why this was our Trade of the Year selection.
- Now it’s just an ATM and we’ll sell 10 June $27 calls for $1.25 ($1,250) and 10 June $27 puts for $1.60 ($1,600) and we’ll see how that goes while we wait for our $35,000 spread to mature.
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- SLB – Blasted up past our goals and already net $23,328 in the $31,250 spread. SLB is going to have to rebuild all those war-damaged facilities in the Middle East so let’s spend $5 ($10,000) to roll the 2028 $42.50 calls up to the 2028 $52.50 calls ($9) and we’ll utilize our wider spread to sell 10 June $50 calls for $3.60 ($3,600) and 10 June $45 puts for $2 ($2,000) and that’s how quickly we recoup half our investment.
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- SYF – I have faith in them holding $65 for the year and we make $12,050 if they do. Worst case is we own 2,000 shares at avg $60 ($120,000).
- TGT – Already at our goal at net $5,450 but it’s a $60,000 spread so great for a new trade and we can sell 10 June $115 calls for $8 ($8,000) and 5 June $110 puts for $6 ($3,000) which is 201% of the net of the trade collected in 86 days. Aren’t options fun?!?
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- WHR – They got clobbered! They are still making $400M a year but $5Bn in debt is a big concern with rising rates and damaged Consumers. The 10 Jan $100 puts at $46.45 ($46,500) can be rolled to 15 2028 $80 puts at $31 ($46,500) and we’ll sell 10 June $60 calls for $3.50 ($3,500) and 5 June $55 puts for $6 ($3,000) while we wait.
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- XOM – Really getting their money’s worth from President Trump! Not good for us as they blew out of our range but we’ll fix it by buying back the short Jan $110 puts for $1,310 ($3,940 profit) and we’ll roll the 20 short 2028 $120 calls at $49.15 ($98,300) to 20 short 2028 $140 calls at $37 ($74,000), spending net $24,300 to make our spread $40,000 wider. We can then take 5 (half) of our short Jan $130 calls at $37.23 ($18,615) and roll them to 10 June $170 calls at $18 ($18,000) to accelerate the Theta (time) decay and sell 10 June $140 puts for $11 ($11,000).
And now, let’s talk about adding something new.
IN PROGRESS
