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Friday, March 29, 2024

Top Trades for Fri, 03 May 2019 11:58 – T

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Top Trades for Fri, 03 May 2019 11:58 – T
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Another penny on /RB – Good for $500 so far – don't be greedy on a Friday – $100 trailing stops.  

/CL at $62.50 – nice gains now.  

EA/Kgab – I think the business is in flux and not really growth so not one I'd play but there is that interesting ESports thing going on and 2.5M people watched their Madden Bowl Game recently, which is pretty good engagement and up from like 400,000 last year.  There's a lot of TV shows that don't get 2.5M views.  So consider that a bonus to their $1.3Bn in earnings and $27Bn ($92.50) doesn't seem that crazy but "doesn't seem that crazy" isn't why I buy something.

Assignment/Yodi – On the other hand, if I get assigned, then it's just time to roll and I didn't have to pay a a spread or fee to get out of my short put – so I usually just wait unless there's somewhere else I clearly want to be on the put side.

T/Yodi – I like T better than VZ and T just bought TWX so content is a nice add to the steady telco biz and VZ is pumped up from sticking FTR with CA, FL and TX but that's 3 big states they won't get earnings from down the road so T remains irresistible to me at $30.63 with their $2.04 (6.5%) dividend so, as a new play on T:

For the OOP:

  • Sell 10 T 2021 $30 puts for $3.75 ($3,750) 
  • Buy 20 T 2021 $28 calls for $4 ($8,000) 
  • Sell 20 T 2021 $35 calls for $1.15 ($2,300) 

That's net $1,950 on the $7,000 spread so $5,050 (258%) upside potential in 20 months and only $5,500 in ordinary margin makes this a pretty efficient way to make $5,050.  

For the LTP:

  • Buy 2,000 shares of T for $30.63 ($61,260) 
  • Sell 20 2021 $30 puts for $3.75 ($7,500) 
  • Sell 20 2021 $30 calls for $2.85 ($5,700) 

That's net $48,060 and we get called away at $60,000 (but we'll probably roll to stay in) for an $11,940 (25%) profit plus we get 6 dividend payments for about $3 ($6,000) for another 12.5% so 37.5% over 20 months makes it a nice thing to do with all the cash we have laying around. 

In reality, this trade uses about $35,000 of ordinary buying power so it's returning more like 50% and, in a PM account, the trade uses perhaps $12,000 of buying power – that's where it really shines.  Even if we go to cash – this is one I'd keep as I'd be thrilled to DD on T at $20 or whatever we hit in a crash.  

 

Revenue $m 128,752 132,447 146,801 163,786 160,546 170,756 177,545 183,465 184,090 +5.8%
Operating Profit $m 30,752 12,212 24,785 24,347 19,970 26,922 27,128     -2.6%
Net Profit $m 18,418 6,442 13,345 12,976 29,450 19,370 18,804 26,186 26,813 +1.0%
EPS Reported $ 3.42 1.24 2.37 2.10 1.49 2.74 2.58     -4.3%
EPS Normalised $ 3.42 1.50 2.38 2.25 1.98 2.89 2.79 3.59 3.63 -3.3%
EPS Growth % +173.8 -56.2 +58.3 -5.2 -12.3 +46.4 +26.7 +24.2 +1.09  
PE Ratio x           10.6 11.0 8.53 8.44  
PEG x           0.44 0.45 7.85 43.7
Profitability

Notice what's projected to happen to earnings when TWX is integrated.  $223 is quite the bargain if they hit those numbers!