Someone has to go out and fix those storm-damaged rigs and that's HAL, who make 50% of their money from North American Rig Services. $20.47 is a $17.8Bn market cap and HAL should make $1Bn this year and $1.5Bn next year so a nice value and they are nowhere near back to their low $20Bn sales figures yet (we need another war!).
In the LTP, we sold 20 HAL 2023 $20 puts for $3 back on June 17th and now they are $3.75 so we're not selling more puts in the LTP, this is just how I like the trade from scratch. In the LTP, we're going to just add the bull call spread.
- Sell 20 HAL 2023 $20 puts for $3.75 ($7,500)
- Buy 40 HAL 2023 $15 calls for $7 ($28,000)
- Sell 40 HAL 2023 $20 calls for $4.25 ($17,000)
As a new trade we're spending net $3,500 on the $20,000 spread that's 100% in the money to start. All we need is for HAL not to go lower and we make $16,500 (471%) – aren't options fun? We're aggressive with the puts but the worst case is owning 2,000 shares at net $21.75, which is 5% above the current price but, of course, we can always roll to lower strikes in 2024 when they come out.
