LLY expects to make $7.5Bn with their weight-loss pills but MRNA can come up with a vaccine so you don't gain the weight in the first place.  That's not where Moderna's focus is, however, their current pipeline looks like this:

We'll hear more about it on their May 4th Conference Call but these were the original goals for the company – Covid was just a bonus that proved their methodology could lead to workable vaccines – why abandon them now?   Traders (not investors) are certainly feeling the pressure as the stock is 66.6% off it's highs but that's a sign to invest, not divest.  

All Biotechs are taking a beating this quarter and yesterday, in our Live Trading Webinar, we were discussing putting more eggs in fewer baskets and MRNA is still our favorite (not counting PFE) but we have a severe loss in our Long-Term Portfolio on that spread:

In context, of course, we promised to buy $280,000 worth of MRNA stock and we're down $82,288 though we did buy back the short calls with a net $24,000 gain so that's a net net $52,288 loss, which is only 20.8% of our commitment to $280,000 worth of the stock.  Also, notice the stock is down 25% since January so we were better off with the options play than owning the stock.  That's because our short puts were PROMISES to buy the stock if it got cheaper, rather than paying $200 at the time.  

If we do intend to stick with MRNA for the long haul – it is beyond foolish not to improve the LTP position.  Our 20 2024 $150 calls are $44.28 ($88,550) and the 2024 $130 calls are $52 and of course it makes sense to spend net $7.72 to push ourselves $12 in the money and gain $20 in strike.  That will cost us $15,440 but we can offset that cost by selling 20 of the $200 calls for $30 ($60,000).  Since that would put us +$44,560 and 20 more longs only cost $104,000 – why not sell 15 more of the 2024 $200 calls for $45,000 and buy 20 more of the 2024 $130s for $104,000 and then we will have spent net $14,440 to move from 20 long 2024 $150 calls to 40 of the 2024 $130 calls, covered with the $200s.

This is also good as a new trade, of course. 

At $200, we would recover $280,000 and, since we have 5 open calls, we can sell 5-10 short-term calls, like the July $170s for $10, to pick up some extra income along the way.  Selling 10 July calls for $10,000 would use 78 of the 631 days we have to sell and 5 extra short calls carry very little risk.  Perhaps we could make $50,000 doing this consistently while we wait – but not yet – let's see how earnings go before selling short calls. 

As to the short puts, $200 is still our target so we'll wait for earnings as we are in the puts at net $175 and net $140, which is where we are now, the rest of the loss is paper premiums, which shouldn't bother us as long as we REALLY want to own the stock – and we do!   There are about $100,000 worth of short puts but the 2024 $150 puts are $45 so we could bump up to 20 of those at $90,000, paying $10,000 to drop to the lower strike and, as we collected $52,000 originally, we'd be in the 20 short puts at net $42,000 or $21 per put so our net entry would be $129 – even lower than we are now.  And that's before we roll out to the 2025 puts, which should come out in July.  

This is how we "fix" a trade but that only works if we were right about the long-term value of our stock and that remains to be seen but MRNA is one I am happy to take a chance on.  Most of our other Biotechs we will be pulling the plug on in favor of this spread, which hopefully will get us our money back and more for the whole group.

JXN/Stock – They were spun out of Prudential (PUK) so people aren't really pricing them properly and analysts aren't covering them properly.  Seems like the company and insiders are taking advantage and buying their stock back (10% buyback recently authorized).  Seems like they are generally variable annuities, not fixed – so shouldn't be too much danger in holding the stock (which is a holding company).  The risk in such a recent spin-off is that the numbers aren't what they seem to be but they have had two independent earnings report – the last on March 2nd and they did indeed make $7.48 per $43 share for the Q.  They are also paying a 5.5% dividend – so very interesting.  

I think JXN is a good add to the Dividend Portfolio since there's good premium in those options.  Let's add a block:

• Buy 1,000 shares JXN at $43 ($43,000) 
• Sell 10 JXN 2024 $40 calls for $10.25 ($10,250)
• Sell 10 JXN 2024 $40 puts for $9 ($9,000) 

That's net $23,750 and we get called away at $40,000 or we get assigned 1,000 more shares at $40 ($40,000) to average $31.875 per share, not including the expected $3,850 in dividends.  That brings our net net down to $19,900 for the 1,000 shares and we'll be disappointed to be called away at $40 (almost 10% lower than it is now) with a double in 20 months.  

Boeing delivered 95 commercial planes in Q1

BA +1.50%Apr. 12, 2022 1:16 PM ET3 Comments

• The Boeing Company (BA +1.7%) reports 95 commercial deliveries in Q1 up from 77 a year ago.
• Of the 95 aircraft delivered, 868 were 737 MAX jets.
• For the month of March, the company delivered 41 aircraft, including 34 of the 737 Max.
• Boeing (NYSE:BA) dropped 152 aircraft from its backlog for the accounting requirement in March, two-thirds of which were related to the war in Ukraine.
• The company's Q1 results will be out on April 27.

In Q1 last year they made $1.4Bn on $15.2Bn in sales and in Q2 they made $2.4Bn on $17Bn in sales and 23% more than $14Bn is $17Bn so we can infer profits should be more like Q2 and BA is only expected to make $2Bn all year and $4.4Bn next year.  It's possible materials and labor are hitting them on costs but 41 in March is on the way to 120 in Q2 and that would be very substantial no matter what.  

In the LTP, we already sold 5 of the 2024 $200 puts for $30 for a net $170 entry and those puts are now $43.65 so we're down 45.5% on that position but BA is at $177.76 so the "loss" is all premium and only realized if we take it.  I don't see the need to sell more unless BA is much lower and then maybe a 2x roll to 2025 whatevers – the 2024 $150 puts are $19 so I'm sure we can drop even lower in 2025 for a net $135 entry on 10.

Since I'm very sure I want to buy 1,000 shares of BA for $135 in our $2.4M portfolio (which is well-hedged), then I still consider our original $15,000 collected to be free money and now we can put it towards a bull call spread in the LTP:

• Buy 20 BA 2024 $170 calls for $42.50 ($85,000) 
• Sell 20 BA 2024 $225 calls for $21.50 ($43,000) 

That's net $43,000 on the $110,000 spread and we sold the puts for $15,000 so net $28,000 with $82,000 (292%) upside potential but, as a new trade, you can sell the 2024 $200 puts for $43.65 and that's $21,825 and the net of a new spread would be just $20,175 with $89.825 (445%) upside potential.  Should BA go lower, THEN I'll want to sell 5 more puts and roll the $170s to the $150s (now $54) for $10 or less so $20,000 more intended to spend if BA goes lower less any additional net from more puts sold – which will depend on WHY they go lower.  If we think the reason is silly – then we'll do an aggressive sale.  If we think BA is weak, we'll do the 2x roll to 2025 which won't net us more money.

Either way, I expect to be able to also make money selling calls along the way.  July $200 calls are $6 so just selling 5 of those brings in $3,000 for the Quarter (one of 7 we have to sell) but let's see how earnings look first.  

BA reports on the 27th so we'll see how things are going but I'd hate to miss an opportunity to get them this cheap. 

DELL/John – They are really not getting credit for their Solutions Group, which has improved margins greatly and essentially drives 80% of the revenues now but it's mixed in with hardware sales and people still think of them as a hardware company.  Getting rid of VMWare in the fall really spooked investors and they are down about 20% but I agreed with DELL and think cloud has run it's growth course and I think they cashed out ($9.3Bn) on top there. They also went right back into cloud services with Apex – so I don't really see a negative getting out of VMW.  They project good, solid growth in the Integrated Service Group and some short-term fast growth in Consolidated as well:

The bottom line is Dell projects $104.5Bn in revenues for 2023 (they are one of those companies that starts in Dec) with $5.2Bn in profits and that's very good for $37Bn at $49.50.  Goldman just said this about them on Friday and sent the stock tumbling:

Dell Technologies (NYSE:DELL) shares fell slightly in premarket trading after Goldman Sachs downgraded the the IT company and removed it from its Conviction Buy List, citing outperformance and fundamental headwinds.

Analyst Rod Hall downgraded the stock to neutral from buy and lowered the price target to $61 from $68, noting that since Dell completely spun out VMware (VMW), the value has been unlocked.

"We continue to believe DELL remains inexpensive compared to its peers, but we see increasing fundamental headwinds hindering this value unlock," Hall wrote.

Lowering their target to $61 shouldn't stop us from buying them under $50, right?  I wouldn't want to get too crazy but, in the LTP, we have no fear of owning 1,000 shares for $50 – so it's essentially free money to us to sell 10 of the 2024 $50 puts for $7.50.  If they drop to $25 – we're happy to buy 1,000 or 2,000 more to lower the basis and sell more puts and calls, right?  So $7,500 is free money and we take that and pick a sensible spread like:

• Sell 10 DELL 2024 $50 puts for $7.50 ($7,500)
• Buy 25 DELL 2024 $40 calls for $12.50 ($31,250) 
• Sell 20 DELL 2024 $55 calls for $5.25 ($10,500) 

That's net $13,250 on the $37,500 spread and I'll be very disappointed if all we do is make $24,250 (183%) at $55+ (10% higher than we are now) but what we have is a nice, uncovered gap where we can sell 5 or 10 short calls, like the June $52.50s, which are $1.55 so if we sold 10 for $1,550, we'd be using 74 (11.2%) of our 655 days to make 11.6% of our net entry back.

That seems worthwhile but we'll wait for it to get higher in the channel or, if it goes lower, we could sell 20 of the July $50 calls, which are now $3 ($6,000) and use that money to roll our 25 2024 $40 calls to the $30 calls, which are now $20 for hopefully $5 or less so $12,500 and then we'd buy 10 or 15 more for maybe $16 so let's say we bought 15 more for $24,000 and then we'd have 

• 10 short 2024 $50 puts 
• 40 long 2024 $30 calls
• 20 short 2024 $55 calls
• 20 short July $50 calls 

And we would have spent $13,250 – $6,000 + $12,500 + $24,000 = $43,750 for the $100,000 spread so instead of looking to make $24,250 at $55, we're now looking to make $56,250 and, of course, we could still reduce that cost along the way with 18 more month to sell when the short Julys run out and, if they don't – we can easily roll them up at least $5 and our spread would be back on track so – on the whole, we'll basically be very disappointed if all goes "well" and we only make 183% on this one.  

LBTYA is interesting.  I think they are flying under the radar due to a complex web of M&A activity and partnerships in Europe with 02 and Virgin Media – so there's no way to effectively judge their current financials but 02 was the 2nd largest Telco in the UK and they are making similar deals in many countries.  Last year they recognized $13.4Bn in profits against a $14Bn market cap but this year will be flat and 2020 they lost $1.6Bn but 2019 they made $11.5Bn – so it's that kind of company.  

If they had 2024 options, they'd be a no-brainer but, over the short-run (October), anything could happen so I'm just watching out of curiosity.  If something goes wrong and they hit $20 – I'd be pretty interested.

Also getting no respect is MT, where $32.80 is $30.3Bn in market cap and these guys easily make $4Bn/yr.  They lost $3Bn combined in 2019 and 2020 but made $15Bn last year so more than made up for it.  I still think Infrastructure Spending will be a thing this decade – just look at all the rebuilding Ukraine has to do!  We sold the 2024 $30 puts in the LTP for $7.50 back on Oct 1st and those are still $5.75 and net $24.25 is still good for a new trade but, since we can sell the June $35 calls for $1.75, this makes sense to add in the LTP:

• Buy 25 MT 2024 $30 calls for $9.25 ($23,125) 
• Sell 20 MT 2024 $40 calls for $5.50 ($11,000)
• Sell 10 MT June $35 calls for $1.75 ($1,750) 

That's net $10,375 but we sold the short puts for $7,500 already so net $2,875 on the $25,000 spread and we've sold $1,750 in short calls using 79 of the 660 we have to sell so let's say we sell 7 more $1,750s for $10,500 – that should work us into a nifty credit over time and it's not likely 5 extra short calls will get us into trouble and if MT really pops – we're more than happy to buy more.  As it stands, the upside potential is $22,125 (a bit less as a new trade but still great) and we could do $10,000 better than that.

EBAY is interesting.  Slow growth but still under $60, which is $35Bn and these guys make $2.5-3Bn pretty consistently.  I know they are pushing into luxury sales in Europe and Auto Parts in the US – both smart moves.  So, I can't see why I wouldn't want to own them for $50 so I think selling 10 2024 $50 puts for $5.25 ($5,250) is just free money and we can use that in the LTP to buy 20 of the EBAY 2024 $60 ($10)/75 ($6.20) bull call spreads for $3.80 ($7,600) to net into the $30,000 spread for just $2,450 with $27,550 (1,124%) upside potential.   Aren't options fun?  

TM not getting respect either at $181.25, which is $248Bn and they make 2.7 TRILLION Yen, which has still got to be something in Dollars, right?  We certainly want them if they get cheaper so let's sell 10 of the TM 2024 $140 puts in the LTP for $9.50 ($9,500) since we'd love to get that for our initial entry and, if not, thanks for the $9,500!  

Logitech pops as BofA initiates with buy rating, sees 40% upside

LOGI +6.55%Mar. 24, 2022 8:19 AM ET

Logitech International (NASDAQ:LOGI) shares rose on Thursday after Bank of America initiated coverage on the electronics peripherals company, saying it sees 40% upside in the stock.

Analyst Adam Angelov started Logitech with a buy rating and a $107 price target, noting that the company's management has a "strong track record of execution," its return on invested capital is at 34% and there are likely further market share gains to come.

Logitech is also likely to capitalize on a "secular megatrend," where social media, gaming and video calling provide growth drivers for updated peripherals, with higher-priced products coming over time.

"Logitech is trading at 9.5x FY24E [enterprise value/EBITDA] vs. its 10yr median of 14x and below its 10-year average trough multiple of 10.8x, suggesting to us that the market sees the COVID growth phase of FY21-22 as a one-off and fears a reset of expectations," Angelov wrote in a note to clients.

Logitech (LOGI) shares rose nearly 4% to $74.60 in premarket trading on Thursday.

In addition, Angelov noted that Logitech (LOGI) has a 5% free cash flow yield, in line with its 10-year median.

Although Logitech (LOGI) has outperformed the STOXX Europe 600, the Swiss Market Index and the NASDAQ over the long term, it underperformed these three indices by 40% to 50% from June to November 2021, Angelov pointed out.

"Given largely unchanged consensus revenue/EBITDA/EPS, we think that buy-side expectations could be below sell-side," the analyst wrote, adding that in-line results or confirming previous guidance "could be viewed as a positive catalyst for the stock."

Earlier this month, Logitech International (LOGI) confirmed its 2022 outlook of 2% to 5% sales growth in constant currency, and $850 million to $900 million in non-GAAP operating income.

Wow, when did they get so cheap?  LOGI is a good solid company that benefits from work at home and they are good for $750M in profits against a $12.4Bn market cap so, for the LTP – we can simply bet they don't go lower than $70 and do very well:

• Sell 10 LOGI 2024 $70 puts for $9.50 ($9,500) 
• Buy 20 LOGI 2024 $70 calls for $16.50 ($33,000) 
• Sell 20 LOGI 2024 $85 calls for $10.00 ($20,000) 

That's net $3,500 so your worst case is owning LOGI for net $73.50 and your best case is collecting $30,000 over $85 with a $26,500 (737%) profit.

Beyond Meat and PepsiCo debut the first product out of their joint venture

PEP -0.59%Mar. 23, 2022 9:20 AM ET8 Comments

• Beyond Meat (NASDAQ:BYND) and PepsiCo (NASDAQ:PEP) announced the debut of Beyond Meat Jerky as the first product coming out of the Planet Partnership joint venture between the two companies.
• Beyond Meat Jerky is described as an on-the-go snack experience that offers traditional beef jerky in original, hot & spicy or teriyaki flavors. Beyond Meat Jerky contains 10g of protein per serving, no cholesterol and is made with simple, plant-based ingredients like peas and mung beans.
• The Planet Partnership JV is said to combine Beyond Meat's (BYND) leading technology in plant-based protein development and PepsiCo's (PEP) world-class commercial capabilities. The launch of Beyond Meat Jerky signals the first of many plant-based protein innovations from the JV.
• Shares of Beyond Meat (BYND) jumped 3.39% premarket, while PepsiCo (PEP) traded flat.

We do like BYND back at $50.  That's where we came in last time as I did the math and the potential is there but it's been very slow to get there – still not profitable (-$180M last year) but 33% sales growth does inspire faith.  $52.50 is $3.25Bn and that makes $150M the magic number for earnings so let's assume 10% drops to the bottom line and that means they need $1.5Bn in sales and $600M in 2022 then $800M next year, $1.2Bn in 2024 and 2025 we hit out goal.  That's still just a drop in the bucket for the meat industry so I guess this goes back in the Future is Now Portfolio as a full play:

• Sell 10 BYND 2024 $30 puts for $7 ($7,000) 
• Buy 25 BYND 2024 $45 calls for $20 ($50,000) 
• Sell 25 BYND 2024 $60 calls for $15 ($37,500) 

That's net $5,500 on the $37,500 spread so we have $32,000 (581%) of upside potential at $60 – I don't think that's asking too much.   Hopefully we can sell some short calls along the way – just 5 (1/5th) of the June $70s at $2.70 are $1,350 using 89 out of 667 days we have to sell but I think we're far too low in the channel to sell short calls just yet.  

I like BIIB down at $200 as it's $29Bn and they are good for $2.2Bn in profits so 13x earnings is fine by me.  Consider the Alzheimer's drug a bonus – even though it could be a blockbuster that doubles the company.  For our Future is Now Portfolio, let's:

• Sell 5 BIIB 2024 $200 puts for $40 ($20,000)
• Buy 20 BIIB 2024 $250 calls for $28 ($56,000) 
• Sell 20 BIIB 2024 $300 calls for $20 ($40,000) 

That's a net credit of $4,00 on the $100,000 spread and yes, it's out of the money but we can always spend some money to roll down the longs or sell some short calls if we get a pop.  Our commitment is to buy $100,000 worth of BIIB at the current price, so we won't be too tolerant if $200 doesn't hold.  

PRU/Kustomz – I might warm up to insurance if rates rise.  Insurance companies are forced to hold vast sums in reserves and they can only put them in BS investments like TBills so rising rates are fantastic for them.  I haven't liked insurance because of added Covid costs but PRU doesn't do much health though they do life and, of course, Global Warming has not been kind to property/casualty.  On the other hand, car insurance has been a huge money-maker with less driving the last two years.  

$103 is $40Bn and, pre-covid, they were good for $4Bn and post they are expecting $4.5Bn so less than 10x.  They lost $374M in 2020 but made $7.7Bn in 2021 so average $3.7Bn is barely dented during the crisis so yes, a great stock to have.  They pay a $4.80 dividend and we have $172,000 cash in the Dividend Portfolio so why not add them?

• Buy 500 PRU at $102.71 ($51,355) 
• Sell 5 PRU 2024 $100 calls for $17.50 ($8,750)
• Sell 5 PRU 2024 $80 puts for $10.75 ($5,375) 

That's net $37,230 and, if called away at $100, it's a $12,770 (34%) profit plus 7 rounds of $600 dividend payments for $4,200 (11.2%) gives us 45.2% over 2 years, paying for almost half the position.  Worst-case is being assigned 500 more at $80 ($40,000) to average $77.23, which is about 25% off the current price – that's not a bad worst case.  

Tupperware Brands launches $75M in accelerated share repurchase program

TUP +10.33%Feb. 28, 2022 8:46 AM ET2 Comments

• Tupperware Brands (NYSE:TUP) trades 2.1% higher premarket after it entered into an agreement to repurchase $75M of its stock in an accelerated share repurchase program which is equivalent to ~4.6M shares and represents ~8.7% of Tupperware's fully diluted outstanding stock.
• The program is expected to be funded with available cash on hand and revolver borrowings.
• Under program terms, Tupperware will make an initial payment of $75M to Wells Fargo and receive an initial delivery of ~3.4M shares of Tupperware's common stock.
• The company will repurchase shares under the ASR program as part of its existing $250M share repurchase authorization, which was approved by its board in June 2021.
• The final settlement of the ASR program is expected to be completed before the end of Q2.

That's a winner!  

$18.18 is $800M and that's half of their $1.6Bn in sales and profits were just $18.6M last year but they expect to normalize back to $120M this year and project $163M next year (10% of sales).  Not only have they gotten stupidly cheap but buying back 10% of their own stock should put a solid floor in around $17.50 so, for the LTP:

• Sell 20 TUP 2024 $13 puts for $3 ($6,000) 
• Buy 30 TUP 2024 $15 calls for $7.50 ($22,500) 
• Sell 30 TUP 2024 $25 calls for $4 ($12,000) 

That's net $4,500 on the $30,000 spread that's $9,600 in the money to start.  Even if we get completely burned and assigned, we'll be in 2,000 shares for $30,500, which is $15.25, which is 16% lower than it is now.  So that's the worst case and the best case is clearing $25,500 (566%) at $25 – good money.

CROX/Stock – Insider buying doesn't matter unless it's significant.  You have to look at how many shares someone already has and see if they are adding or subtracting more than 10% of their holdings.  Even then it could be just normal diversification if that's a significan chunk of their wealth in one place.  Most insider buying is theatrical, although sometime a stock is just stupidly cheap but if they "know something" then it's illegal to buy ahead of the public.  That's why Buffett announces his support prices at each meeting – no surprises. 

We decided CROX was too cheap.

February 16th, 2022 at 1:54 pm | (Unlocked) | Permalink

CROX/8800 – Been a while since we played them.  They are a $6Bn company now – that's crazy!  Making about $550M a year so $6Bn is very fair but they sold off anyway.  I think they gave too good guidance and expectations were too high but nothing wrong with them.  Still, I'd let them find a bottom but this is a good entry point.

 

At the moment, we can:

• Sell 10 CROX 2024 $65 puts for $12 ($12,000) to net in for $53 – about half the current price.  
• Buy 10 2024 $75 calls for $40 ($40,000) 
• Sell 10 2024 $125 calls for $21 ($21,000) 

That would be net $7,000 on the $50,000 spread that's $20,000 in the money – so a good place to start.  Let's add that to the Earnings Portfolio, which has plenty of cash.

Also, in the LTP, let's sell 10 of those 2024 $65 puts for $12 – because who doesn't like $12,000?  

February 17th, 2022 at 11:55 am | (Unlocked) | Permalink 

CROX/8800 – I feel more comfortable at $65.  When something changes and a large investor decides to get out – it can take them a while to unwind and pressure stays on the stock.  CROX turns 2M shares a day, so $200M and they have a $5.2Bn valuation so, if 10% of the people want out, it will take them a week to unwind, at least.  That's part of the logic of the 5% Rule – it let's us see when that pressure is rising or falling. 

February 18th, 2022 at 1:52 pm | (Unlocked) | Permalink

CROX/8800 – So far, it looks like someone huge is dumping until -$20, then pausing…  May not stop here.  

So now we check the 2024 $75 calls and they are $30 and the $65 calls are $34 and we're not going to regret that so, in the Earnings Portfolio, let's roll the 10 CROX 2024 $75 calls down to the $65 calls for net $4 ($4,000) and that puts us in for $11,000 and we're $17,500 in the money on what is now a $60,000 spread.  

Usually $3.50 is about as low as the $10 rolls get so $4 is great.  The $55s are currently $39 and we have no need to make that but, if they drop down to $34, then we could do the roll ($4,000) and double down on the $55s ($34,000) and sell 10 of the 2024 $80 calls, which are now $29, maybe for $24 ($24,000) and we would have spent net +$9,000 to be in 20 of the 2024 $55 calls covered by 10 of the $80s and 10 of the $125s – all in for $20,000 with $50,000 paid at $80 – still not bad, right?  

Of course when we initiate a bet – we try to get away with spending no money and making a fortune and, sometimes, that works out but, when it doesn't – we can't be afraid to make a proper investment.  

Cutting/Yodi – Yes, enjoy those gas bills!