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Tuesday, July 16, 2024

Top Trades for Thu, 02 Apr 2020 12:58 – CMCSA

Top Trades for Thu, 02 Apr 2020 12:58 – CMCSA

I very much hope our Top Trade Members are keeping up with your hedges.  We can't have just bullish trades in our portfolio.  We did a Short-Term Portfolio Review yesterday morning and these are the hedges we use to protect our long positions at PSW:


I commented on the Oil move in Member chat this afternoon:

Well, I'm unable to confirm from anywhere but Trump's tweet that oil will be cut by 10Mb/d and, looking at the FACTS, that dosn't make a lot of sense with the Saudis and Russia at 22Mb/d so are they going to cut 50% of their production?

Again, math….

10Mb/Tangled – And that's math too.  We just saw a build of about 20Mb in a week in the US so consumption down 3Mb/d (15%) which means in an 80Mb/d global market, they need to cut 12Mbd – assuming it's consistent.  

My guess is (if we can assume there's even a grain of truth in what Trump said) that MBS said to Trump that THEY (including the US, all of OPEC and Russia) need to cut production by 10Mb/d to balance things out – not that the Saudis and Russia were offering to bite the bullet for the whole World.   

CMCSA/Tx – I think the last thing people will do in this crisis is cut their cable/internet but Comcast is victimized by their diversity (like DIS) as they also own theme parks and sports teams and arenas as well as DreamWorks, Universal Pictures, NBC Studios, Telumnudo and Sky Sports – which are horribly hurting at the moment.  About 1/2 their money comes from TV/Internet and the rest is in trouble.  Theymade $13Bn on $108Bn in revenues last year so, long-term, $34 ($155Bn) is a good deal but April 30th earnings are likely to be a shambles and too soon to predict an end to the nightmare so I'd be careful but still an opportunity to establish a 1/4 entry:

For the LTP:

  • Sell 5 CMCSA 2022 $30 puts for $5 ($2,500) 
  • Buy 15 CMCSA 2022 $30 calls for $8.25 ($12,375) 
  • Sell 15 CMCSA 2022 $40 calls for $3.75 ($5,625)

That's net $4,250 on the $10,000 spread so $5,750 (135%) of upside potential at $40 and we HOPE it goes lower so we can DD on the puts ($3,000) and roll the $30s to the $20s ($5,000) for net $2,000 and then we'd be in the $20,000 spread for $6,250 but, for now, best to start off cautiously and, worst case, it goes up and we "only" make 135% on our original play.  

Biden's Weekends at Bernie's - WND

And what Pirate and 1020 said!