13.4 C
New York
Tuesday, April 30, 2024

Top Trades for Wed, 30 Mar 2022 11:17 – MT, EBAY and TM

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Top Trades for Wed, 30 Mar 2022 11:17 – MT, EBAY and TM
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LBTYA is interesting.  I think they are flying under the radar due to a complex web of M&A activity and partnerships in Europe with 02 and Virgin Media – so there's no way to effectively judge their current financials but 02 was the 2nd largest Telco in the UK and they are making similar deals in many countries.  Last year they recognized $13.4Bn in profits against a $14Bn market cap but this year will be flat and 2020 they lost $1.6Bn but 2019 they made $11.5Bn – so it's that kind of company.  

If they had 2024 options, they'd be a no-brainer but, over the short-run (October), anything could happen so I'm just watching out of curiosity.  If something goes wrong and they hit $20 – I'd be pretty interested.

Also getting no respect is MT, where $32.80 is $30.3Bn in market cap and these guys easily make $4Bn/yr.  They lost $3Bn combined in 2019 and 2020 but made $15Bn last year so more than made up for it.  I still think Infrastructure Spending will be a thing this decade – just look at all the rebuilding Ukraine has to do!  We sold the 2024 $30 puts in the LTP for $7.50 back on Oct 1st and those are still $5.75 and net $24.25 is still good for a new trade but, since we can sell the June $35 calls for $1.75, this makes sense to add in the LTP:

  • Buy 25 MT 2024 $30 calls for $9.25 ($23,125) 
  • Sell 20 MT 2024 $40 calls for $5.50 ($11,000)
  • Sell 10 MT June $35 calls for $1.75 ($1,750) 

That's net $10,375 but we sold the short puts for $7,500 already so net $2,875 on the $25,000 spread and we've sold $1,750 in short calls using 79 of the 660 we have to sell so let's say we sell 7 more $1,750s for $10,500 – that should work us into a nifty credit over time and it's not likely 5 extra short calls will get us into trouble and if MT really pops – we're more than happy to buy more.  As it stands, the upside potential is $22,125 (a bit less as a new trade but still great) and we could do $10,000 better than that.

EBAY is interesting.  Slow growth but still under $60, which is $35Bn and these guys make $2.5-3Bn pretty consistently.  I know they are pushing into luxury sales in Europe and Auto Parts in the US – both smart moves.  So, I can't see why I wouldn't want to own them for $50 so I think selling 10 2024 $50 puts for $5.25 ($5,250) is just free money and we can use that in the LTP to buy 20 of the EBAY 2024 $60 ($10)/75 ($6.20) bull call spreads for $3.80 ($7,600) to net into the $30,000 spread for just $2,450 with $27,550 (1,124%) upside potential.   Aren't options fun?  

TM not getting respect either at $181.25, which is $248Bn and they make 2.7 TRILLION Yen, which has still got to be something in Dollars, right?  We certainly want them if they get cheaper so let's sell 10 of the TM 2024 $140 puts in the LTP for $9.50 ($9,500) since we'd love to get that for our initial entry and, if not, thanks for the $9,500!