Top Trades for Thu, 22 Oct 2020 09:44 – CHL

Good morning!

Please not the following CHL adjustment for the Dividend Portfolio and new trade for the LTP:

Yesterday, in our Live Trading Webinar, we talked about some other stocks that were still cheap at the moment.   T was a Top Trade Alert the same day as PFE and it's a lot cheaper now than it was then (a nice way to say we called it wrong) at $26.72 on the day of their earnings.  This is idiotically low and earnings were just OK but the stock is popping to $28 because, as I said in the Webinar, just because a stock is being sold off by idiots doesn't mean it's not a bargain.  Things like earnings tend to balance that out but here's another Top Trade you can still pick up at a good price.

If T is making money, I bet China Mobile (CHL) is making money as they have 950M subscribers and AT&T has around 100M yet T is valued 50% more than CHL, which is trading at 7.6x earnings.  We already have CHL stock in our Dividend Portfolio, because it pays $1.97 (6%) per $32.65 share and we have 1,000 shares so we're going to promise to double down at $30 by selling 10 2023 $30 puts for $5.50.  That would net us into 1,000 more shares at $24.50.

You can just sell the puts for $5,500 to initiate a long position but, in our Long-Term Portfolio, we're going to also buy 30 of the 2023 $27.50 ($6)/35 ($3) bull call spreads for net $3 ($9,000) and that will put us in the $22,500 spread for net $3,500 and we're sure to be able to make that up selling a few calls along the way.  The ordinary margin on the short puts is $1,444 so it's a super-efficient play as well.  If all goes well and CHL is over $35 in Jan, 2023, then the profit on the spread will be $19,000 (542%).

See, there are still things to buy, even in a pandemic economy…





Top Trades for Wed, 14 Oct 2020 10:06 – GS

Good morning!

Oil up to $41 on this API data:

Crude -831k Cushing + 1,6M Gasoline +1,6Mi Distillates – 3,6M

It's pretty much net 0 so I'm for shorting /CL here with tight stops above.  /RB too at $1.20.

Just a good risk/reward play – not a lot of conviction.

Don't forget our GS play from the main post for the LTP:

There's been some spillover from Main Street to Wall Street as Bank of America's (BAC) profits are down 16% in today's report and Wells Fargo's (WFC) are down 56% but Goldman Sachs' profits almost doubled expectation at $9.68 per $215 share in a single quarter – very impressive.  We don't have much banking in the LTP and GS is a good one (well, evil, but good earnings) so let's add them with the following trade:

  • Sell 5 GS 2023 $165 puts for $20 ($10,000) 
  • Buy 10 GS 2023 $170 calls for $60 ($60,000)
  • Sell 10 GS 2023 $210 calls for $40 ($40,000) 

That's net $10,000 on the $40,000 spread that's 100% in the money to start and all GS has to do is not be lower than it is today in 2.25 years and we make $30,000 (300%) – aren't options fun?  Our worst-case scenario is owning 500 shares at net $185, 15% lower than the current price and the ordinary margin requirement is just $5,718 – so it's a very margin-efficient way to make $30,000 too!





Top Trades for Mon, 12 Oct 2020 06:53 – IBM

Good morning!

Hope everyone had a good weekend.

Should be kind of a slow semi-holiday today.

IBM/Batman – Krishna says the hybrid cloud opportunity is a $1Tn market:

"Client buying needs for application and infrastructure services are diverging, while adoption of our hybrid cloud platform is accelerating … Now is the right time to create two market-leading companies focused on what they do best."

 

The company will spin off the Managed Infrastructure Services unit of its Global Technology Services operation into a new public company. The tax-free deal is expected to be completed by the end of next year.

The company sees Q3 adjusted EPS of $2.58 vs. consensus of $2.58, and revenue of $17.6B vs. $17.56 consensus.

So they've raised guidance ahead of the spin-off and they're not doing the spin-off to head lower, right?  Last two Qs were $1.84 and $2.18 so these guys are pretty virus-proof so $2.58 and last year's Q4 was $4.71, which would put us at $11.31 though I doubt Q4 will be as strong as last year.  So $12.30 is not out of the question but the spin-off and transition could be a bit disruptive so I wouldn't go too crazy but I'm certainly comfortable with IBM at $125 for the long-haul as the same good value it was when we picked it at $110 in Nov 2018 as our Stock of the Year for 2019.  

The Stock of the Year doesn't have to go up (we hit $150 in Jan 2020) but it does have to be one we are certain will make 300% with an options trade and just knowing we got a bargain was enough to be sure with IBM.   

At the moment, I wouldn't make IBM the stock of the year because it COULD fall back to $100 if the market tanks.  THEN I would love it but $127.79 is simply a good price at the moment.

Of course you can own IBM for $100 by selling the 2023 $100 puts for $11.50 so, if we consider that free money, then our trade can be:

  • Sell 5 IBM 2023 $100 puts for $11.50 ($5,750) 
  • Buy


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Top Trades for Thu, 08 Oct 2020 08:44 – JETS and Future Is Now Portfolio Review

Good morning! 

Speaking of the Future is Now Portfolio, it's been doing very nicely (up 67.4% for the year) but it is risky times so let's cash in our short puts, which are over 80% anyway (ALB too) and make room for more Futuristic trade ideas down the road.  

Since we don't have hedges, cashing the short puts reduces our downside risk and we REALLY want to own our other positions, so we're not worried about those puts but let's see if they are worth keeping:

  • ARNC - This is an $8,000 spread and it's currently net $8,725 so we should really cash those out, right?

  • BYND – This is a $25,000 spread at net $21,985 so I guess there's no point in waiting 16 months for the last $3,015, is there?   

  • SPWR – We liked them so much we played them twice!  We have the $20,000 spread that's currently net $11,170 so that's good for a new play!   Then we have the older $28,000 spread that's currently net $13,640 and that's good for a double too if SPWR doesn't fall below $12 – so both of those are keepers.

See how I snuck that in there?  We just killed the Future is Now Portfolio, other than SPWR, which my hands got sore from banging the table on early this year but at least we added JETS and we'll look for some more bargains as earnings season comes around again.   

To reiterate, out new trade idea for this portfolio (from the Morning Report) is:

Stimulus talks are still up in the air with the Airline Industry hanging by a thread.  Yesterday, the Democrats tried to


continue reading





Top Trades for Thu, 01 Oct 2020 13:39 – EPD

Oil came down hard.  

Don't blame the Dollar:

Blame the global outlook on demand:

BBBY/Wilsons, Atty – Nice job on the patience play.  

Top Trades for Thu, 16 Apr 2020 15:15 – BBBY

 

  • Baird checks in on Bed Bath & Beyond (BBBY +17.2%) after the retailer's earnings reporte.
  • "While we believe BBBY has enough liquidity to survive this downturn, the unprecedented demand shock adds another layer of complexity to what is already a difficult turnaround process,' reads the firm's update.
  • Q2 and Q3 are seen dropping 5% to 20% from last year's levels.
  • Barid keeps a Neutral rating in place and lowers its price target to $5 from $10 to reflect reduced EPS estimates.
  • Previously: Bed Bath & Beyond +13% after slight sales beat (April 15)

Very tempting down here!  I think, for the LTP, we may as well pick up the 50 of the BBBY 2022 $3 ($3.55)/10 ($1.45) bull call spreads at $2.05 ($10,250) and sell 20 of the 2022 $5 puts for $2.62 ($5,240) for a net $5,010 entry on the $35,000 spread so $29,990 (598%) upside potential if BBBY can get back to $10 in 20 months. 

Sadly, I forgot to enter it. 

Good little company with a nice dividend.  I like it!   We already have ET in the Dividend Portfolio but I think there's room for EPD and their $1.78 dividend so let's go for the following:

  • Buy 1,000 shares EPD at $15.92 ($15,920) 
  • Sell 10 EPD 2023 $13 puts for $2.85 ($2,850)
  • Sell 10 EPD 2023 $15 calls for $3 ($3,000) 

That's net $10,070 on the $15,000 spread so about 50% upside and the $1.78 dividend is 17.67% while you wait!  Worst case is we get to own 2,000 shares at an average of $11.53, which is a 27.5% discount to the current price.  That's the worst case – and we're not even counting the $3.50(ish) you will collect in dividends over 2 years.  Aren't options fun?





Top Trades for Mon, 28 Sep 2020 11:19 – PFE & T

Good morning!

We blew over 3,333 (/ES) but that will make it a better short on the way back down – if we do go back down.  Russell if flying at the 2.5% line (1,505) so we'll see how that goes.

We discussed PFE in the Morning Report:  The Week Ahead – 3,350 is Critical for the S&P 500

Let's add PFE officially to the LTP as it's a solid entry:

  • Sell 15 PFE 2023 $35 puts for $6.60 ($9,900)
  • Buy 50 PFE 2023 $30 calls for $8 ($40,000) 
  • Sell 50 PFE 2023 $37 calls for $4.60 ($23,000) 

That's net $8,000 on the $35,000 spread so our upside potential is $27,000 (337%) and our worst-case scenario is owning 5,000 shares at $35, which I doubt will be a bad thing. 

We will, of course, sell some short calls, like 10 Nov $37 calls at $1.45 would use up 53 of our 844 days so not even 10% and if we collect $1,450 10 times, that's $14,500, adding 50% to our potential profits – but we'll only sell when we feel PFE is toppy – and it isn't at the moment.

On the Big Chart, watch the NYSE and the 200 dma at 12,372 – safe for now at 12,686 on today's 200-point pop.  Otherwise, we'll see if we can get back over and hold those 50 dma lines but all are being death-crossed by the 20 dmas – there's no stopping that from happening. 

T/Millard – We love…
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Top Trades for Wed, 16 Sep 2020 15:29 – LNG and M

I think the rally off the Fed is silly and, of course, 3,420 is our shorting spot on /ES (as I mentioned in the Webinar) so tight stops above.  

The Fed said nothing new at all yet we rallied?

WBA/Maya – Tomorrow. 

GE/Ati – Wow.  Amazing how they suddenly become more valuable.

In the Webinar we were still liking IMAX and M and LNG from above though LNG is already popping.

For Macy's it was (I'm changing the year):

  • Sell 20 M 2023 $7 puts for $3 ($6,000)
  • Buy 50 M 2023 $5 calls for $3.70 ($18,500)
  • Sell 50 M 2023 $10 calls for $2 ($10,000)

That's net $2,500 on the $25,000 spread so good for a 10-bagger if M gets their footing back.

IMAX is now going to 2023 but the spreads are all over the place so we'll have to wait a bit.

LNG has popped a lot, now $50.44 but we can adjust it as:

  • Sell 5 LNG 2023 $45 puts for $9 ($4,500)
  • Buy 10 LNG 2023 $40 calls for $18 ($18,000) 
  • Sell 10 LNG 2023 $55 calls for $11 ($11,000)

That's net $2,500 on the $15,000 spread so $12,500 (500%) of upside potential at $55 and we've got 2.5 years to get there.  





Top Trades for Thu, 03 Sep 2020 15:01 – VIAC

Wheee, that was fun!

Now we'll see what kind of bounce we get at 28,200, 3,450, 11,800 and 1,540

Nice move on RB, $1.20 is the stop line now – congrats to the players. 

IMAX/Swamp – Not sure WHICH IMAX trade so can you post it?  I think they are solid long-term but, if uncovered, might be a good time to do so.

Vaccine/Batman – That is the lie you choose to believe?  Trump is planning an "October" surprise of pushing out ANYTHING that seems like a vaccine so he can claim victory before the side effects are revealed.  Again, a day does not a trend make and the looming DISASTER is sending 50M children back to school WITHOUT a vaccine in a population that's only been about 70% exposed.    As I said in the Webinar yesterday, I like M, I like WBA, I like VIAC, I like IMAX – not because there's maybe a vaccine but because they are just great values and a vaccine would be a bonus but, even without one – I'll be happy to own them in 10 years.

VIAC/Batman – As a new spread, I'd go for:

  • Sell 5 VIAC 2022 $25 puts for $5.15 ($2,575) 
  • Buy 10 VIAC 2022 $25 calls for $7.50 ($7,500)
  • Sell 10 VIAC 2022 $32.50 calls for $4.35 ($4,350) 

That's net $575 on the $7,500 spread that's $3,000 in the money to start with an upside potential of $6,925 (1,200%) at a very reachable $32.50 in 18 months.  I think that's a comfortable ROI and the worst-case is owning 500 shares of VIAC for $26.15, about 10% off the current price.  

MHVYF/Tech – That's Mitsubishi Heavy Industries, not Mitsubishi Financial – two separate stocks.





Top Trades for Thu, 20 Aug 2020 14:00 – T

Dividend Portfolio Review:   $194,202 is down 2.9% and that's a 7.2% improvement from last month so nice comeback – especially for a portfolio without any internal hedges.  We rode out a downturn once and I hope we don't have to do it again but, like the Butterfly Portfolio, these are super-solid, battle-tested positions I would hate to part with.

  • PFE – Up too much to leave it on so we'll close this one.
  • CHL – Just paid us a very fat dividend so no reason to sell them and they are even on track with the short puts and calls.

  • ET – Also right where we want them.
  • MO – A bit lower than we hoped but on track and paying our dividends so it's fine.  
  • SPG – Right on track.  This one makes for a good bullish bet at this price.

  • TWO – On track.
  • F – Suspended the dividend but we still love them at 1/13th TSLA's price.  
  • M – Also no dividends being paid but I'm still hopeful on the recovery.

  • SIG – Suspended dividends.  We're aggressively long and hopefully they are consolidating for a move up.

  • SKT – Suspended dividends and we're aggressively long.

  • T – Still paying a dividend.  We have been buying T at $30 or less ever since PSW started and it's still a great thing to do.  They paid us 0.52 on July 9th, that's $4.08/yr on a $29.74 share – that's 7% dividend AND you get to own T at $29.74.  How can you people say there aren't things to buy when there are things like this to buy?

For the T-less LTP, let's add the following:

  • Sell 25 T 2022 $28 puts for $3.25 ($8,125) 
  • Buy 75 T 2022 $28 calls for $3.40 ($25,500) 
  • Sell 75 T 2022 $33 calls for $1.40 ($10,500) 

That's net $6,875 on $37,500 spread so there's $30,625 (445%) of upside potential if T can simply move up 10% over the next 18 months and, since our worst case is owning 2,500 shares of T for $28 ($70,000) + $6,875 if we're wiped out on the spread, that's about $30, which is the current price so our worst case is owning T and collecting 7% dividends - not a bad worst case





Top Trades for Fri, 14 Aug 2020 10:52 – WBA

Good morning!

/NG flying again this morning.

WBA/Rookie – That LTP position started out with 40 2022 $40s and 10 short 2022 $55s and 20 short 2022 $45 puts on 3/2 and then we rolled down to 50 of the 2022 $30 calls and covered with 30 of the $52.50 calls.  We bought back the short calls for a $5,350 profit and lost $6,800 on the rolled longs and made $2,400 (so far) on the short puts so the position is, overall, about even in the LTP.  I think $40 is ridiculously low for WBA and the portfolio is up 100% so we can afford to gamble but, if you can't, then by all means at least partly cover your longs.  

$42 is $36Bn for WBA and I am, frankly, bored with reiterating my very simple premise that this stock is ridiculously undervalued so, hopefully, a picture is worth 1,000 words, because I am out of them at this point:

In Q1, which ended 2/29, they made $952M and in Q2, at the heart of the closings, they lost $1.7Bn and, even if they lose another $1.7Bn (doubtful) they can make it all up in 3 normal quarters going forward.  

As a more conservative play, from scratch, I would go with the following:

  • Sell 10 WBA 2022 $35 puts for $4.25 ($4,250)
  • Buy 15 WBA 2022 $35 calls for $8.50 ($12,750)
  • Sell 15 WBA 2022 $50 calls for $2.65 ($3,975) 

That's net $4,525 on the $22,500 spread that's $9,000 in the money to start.  The upside potential is $17,975 (397%) if WBA can get back to 50 over the next 18 months, which seems very reasonable to me.

Fire/Snow – Stay safe.





 
 
 

Zero Hedge

Huawei "Outhustles Trump" By Successfully Stockpiling Enough Chips For 5G Rollout

Courtesy of ZeroHedge View original post here.

As fully expected and predicted it's now confirmed that that Huawei has successfully thwarted Trump's sanctions by stockpiling chips to ensure their global 5G rollout runs smoothly with no expected major hitches. Bloomberg writes Thursday that it has effectively "...



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Phil's Favorites

SPINNING WHEEL

 

SPINNING WHEEL

Courtesy of Almost Daily Grant's

Top of the heap no more. International Business Machines Corp. reported third quarter earnings on Monday, including $17.56 billion in revenues.  That’s down 2.6% from a year ago and 3.1% sequentially and the weakest result since the first quarter of 1997. 

While $2.58 in headline earnings per share was down 4% from a year ago, a series of salutary one-time adjustments spruced up that figure, which was 27% above the $1.89 per share derived from generally accepted accounting principles.  Even those GAAP results were flattered by a meager 7% corporate tax rate.  In 1985, when then-dominant IBM commanded a 6.4% share of the market cap-weighted S&P 500 (a record single-stock concentrati...



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Politics

How to track your mail-in ballot

 

How to track your mail-in ballot

Make sure you know when your ballot is arriving, and whether it’s been accepted for counting back at your election office. erhui1979/DigitalVision Vectors via Getty Images

Courtesy of Steven Mulroy, University of Memphis

Many voters who want to participate in the election by mail are concerned about when they’ll receive their ballot – and whether it will get back in time to be counted.

The pandemic has caused interest in ...



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ValueWalk

A New Judge At The Expense Of COVID Relief

By Ankur Shah. Originally published at ValueWalk.

What’s At Stake for Small Businesses with another Conservative Supreme Court Confirmation?

Q3 2020 hedge fund letters, conferences and more

Press Call - Monday - 2pm ET - Register

Senate Wants A New Judge At ...

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Biotech/COVID-19

Disney's pivot to streaming is a sign of severe COVID economic crisis still to come

 

Image by Eiji Kikuta from Pixabay

 

Disney’s pivot to streaming is a sign of severe COVID economic crisis still to come

Courtesy of Hamza Mudassir, Cambridge Judge Business School

Disney has announced a significant restructuring o...



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Kimble Charting Solutions

Doc Copper/Gold Indicator Breaking Out Again?

Courtesy of Chris Kimble

The Doc Copper/Gold ratio broke above a 2-year falling channel back in 2016 at (1). Following this breakout, it rallied for the next year. During that year, Copper related assets did very well!

The ratio peaked in the summer of 2018 and created a series of lower highs over the past two years.

The strength of late has the ratio attempting to break above dual resistance at (2).

If the ratio continues to push higher and succeeds in breaking out, Copper, Basic Materials (XLB), and ...



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Chart School

Dow Gann Angle Update

Courtesy of Read the Ticker

Time to see what happens to the Dow post US elections.

The Dow Gann Angle Target 3 (from 2007 top) is on the table, and what a ride that will be. The FED went BRRRRR is all the fundamental news you need to know. Gann angles are very good tool to see how the masses are pushing price.


Click for popup. Clear your browser cache if image is not showing.



The last two US elections saw Bitcoin and the DOW rally well for 6 months, due to stimulus. The most bearish 2020 US Election case for the markets is a Biden win with the Senate and Congress controlled by the Democrats, somehow this blog feels that is very unlikely. So what could go wrong!


...

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Digital Currencies

Bitcoin: the UK and US are clamping down on crypto trading - here's why it's not yet a big deal

 

Bitcoin: the UK and US are clamping down on crypto trading – here's why it's not yet a big deal

Where there’s a bit there’s a writ. Novikov Aleksey

Courtesy of Gavin Brown, University of Liverpool

The sale and promotion of derivatives of bitcoin and other cryptocurrencies to amateur investors is being banned in the UK by the financial regulator, the Financial Conduct Authority (FCA). It is a...



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Mapping The Market

COVID-19 Forces More Than Half of Asset Management Firms to Accelerate Adoption of Digital Marketing Technology

By Jacob Wolinsky. Originally published at ValueWalk.

There is no doubt that the use of technology to support client engagement initiatives brings both opportunities and threats but this has been brought into sharp focus this year with the COVID-19 pandemic.

The crisis has brought to the fore the need for firms to enable flexibility in client engagement – the expectation that providers will communicate to clients on their terms, at their speed and frequency and on their preferred channels, is now a given. This is even more critical when clients are experiencing unparalleled anxiety from both market conditions and their own personal circumstances.

...

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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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Ilene is editor and affiliate program coordinator for PSW. Contact Ilene to learn about our affiliate and content sharing programs.