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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 T when it's cheap and $28 is cheap.   T is already in the LTP and the same position is still good (because it's cheaper now):

T Long Call 2022 21-JAN 28.00 CALL [T @ $28.04 $0.00] 75 9/3/2020 (480) $25,500 $3.40 $-1.06 $3.40     $2.34 $0.00 $-7,950 -31.2% $17,550
T Short Call 2022 21-JAN 33.00 CALL [T @ $28.04 $0.00] -75 9/3/2020 (480) $-10,500 $1.40 $-0.54     $0.87 $0.00 $4,013 38.2% $-6,488
T Short Put 2022 21-JAN 28.00 PUT [T @ $28.04 $0.00] -25 9/3/2020 (480) $-8,125 $3.25 $0.50     $3.75 $0.00 $-1,250 -15.4% $-9,375

BRK.B/Stuart – It's mostly a proxy for the S&P but without the bad apples so I like them as a tool that way but, like the S&P, it's a bit expensive now.  

Also with BRK/B – don't forget Buffett will retire or die at some point and you could get a very sudden 20% hit to your stock.  THAT is when I will buy it.

Warren Edward Buffett



August 30, 1930 (age 90)

Slippery is right Maya.  

The information's unavailable

To the mortal man

We work our jobs

Collect our pay

Believe we're gliding down the highway

When in fact we're slip slidin' away

LOL 1020.  Is that pro or anti DeSantis?  Hard to tell….


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