We love Altria long-term and they went on sale over the vaping debacle but now that is likely put to bed and we'd like to play:
batman (premium) November 8th, 2019 at 2:53 pm | Permalink |
MO – This is what I had been looking at at several sites…. this is actually good news for MO. From WSJ
NEWS ALERT
Investigators Find Clue to Mysterious Vaping Injuries
Vitamin E oil was detected in all 29 samples taken from vaping patients tested by the Centers for Disease Control and Prevention, the federal agency said, a tantalizing clue in the investigation into the cause of the mysterious lung injuries.
Researchers found the oil in fluid taken from the lungs of vaping patients from 10 different states, the CDC said. No other suspicious substances were detected aside from Vitamin E oil, or acetate.
MO/Batman – Damn, Ken (from New Age) told me that was what it was two month ago! It's very bad for you if you heat it and inhale it.
Good reason to add MO to the Dividend Portfolio as they pay $3.36 so $46.20 is stupidly low for them.
- Buy 500 MO at $46.20 ($23,100)
- Sell 5 MO 2022 $47.50 calls at $5.50 ($2,750)
- Sell 5 MO 2022 $40 puts for $6.20 ($3,100)
That's net $17,250 and we get called away at $23,750 with a lovely $6,500 (37.7%) gain and then $3,360 in dividends over 2 years adds another 19.5% return which is great for such a conservative spread.
In the STP, we can be a lot more aggressive. Earnings should be early Feb and they are very likely to raise guidance (they massively wrote down JUUL this Q) so we can play for a spring pop:
- Sell 5 MO March $47.50 puts for $4 ($2,000)
- Buy 15 MO March $42.50 calls for $4.70 ($7,050)
- Sell 15 MO March $47.40 calls for $1.85 ($2,775)
That's net $2,275 on the $7,500 spread so $5,225 (229%) upside potential in just 4 months is worthy of the STP.
