Truth is, we get a little P’d-off every time this quadrennial drama of presidentiality falls upon us.
The reason for the ire is part philosophy, part real life, and we’re going to take a moment to explain it to you.
For starters, know it well – any time someone appeals to you about the need for all of us to be ‘brothers’ or to ‘stand united’ or any other such drivel, they’re almost always looking for someone to take orders.
Their ideas, their orthodoxy, and your backside … to take the whip.
It’s an iron rule, and you should run as fast and as far from these people as you can. Very often, they’re people who talk a lot, too – another quality that should trip your hair-triggers and make you flee to Appalachia. Quiet people are almost always more trustworthy. Not to a man. But on the whole, they’re a much safer bet, in our experience.
What gets under our skin is the increasingly meddlesome nature of the state and the incomprehensible tolerance of so much of the voting public to put up with it. We won’t delve much deeper than that, except to ask,
- Why in the world would anyone give up their liberty to some amorphous splodge called ‘government’, where no one is personally responsible for anything done in its name, and
- Why would anyone surrender their independence and prerogative to act on their own behalf and in their own interest to a bureaucracy that’s neither accountable to anyone, nor has any vested interest in the public weal?
It’s mind boggling.
But that’s the trend.
Heaven help us if we let it continue.
A perfect world, in our view, is one that consists of a great number of independent and responsible individuals who have a common interest in one thing: being independent and responsible.
Beyond that, we say let individuals come together when they have a common mutual interest or when the needs of their community bind them to act in some manner either temporary or permanent to fix a problem that they all agree is a problem.
And yet beyond that, let there be no exterior force that intervenes to tell anyone how to deal with or otherwise conduct business with his independent, responsible neighbor.
It’s always around election time, when politicians hit the hustings to tell you how much they plan to do for you and how much they’re ready to disrupt your life and your plans and those of your independent, responsible neighbor, that we get this downright bilious condition.
To the barnacles with the lot of them!
We’ve got a number of trades to close before we get on to this week’s initiative, so take out your scorecards and start scribbling.
The first was initiated on April 26th in a letter called Trading Basics. There, we urged you to consider selling two (2) TSLA September 215 PUTs for $14.55 each and buying a TSLA September 260 CALL for $23.80. Total credit for the trade was $5.30.
Needless to say, the CALL finished out-of-the-money, but the two PUTs didn’t. We’re therefore holding two lots of TSLA purchased at 215. With the stock now trading at $207.45, we’re underwater $7.55 on each. Considering our initial credit, call it a current loss of $9.80.
What do we do?
This one’s not so complicated. We own the shares; the idea is to get re-compensated for our costs. We’re therefore going to put a ‘fix’ on by turning our long stock into a covered CALL.
We recommend you sell two October 28th 107.50 CALLs for $7.00 each. That will put you back in the black and offer you a net profit of $4.30 if the shares are called away.
Keep an eye here for updates.
We move now to our July 26th trade that saw you sell the KOL October 11 PUT for $0.90 and purchase two (2) KOL October 11 CALLs for $0.40 each. The letter was called Commodity Revolution, and the total credit on the trade was $0.10
The PUTs are trading for $0.20 and the CALLs for 0.65 and because coal is a genuinely political item this election season, we’re not going to let things run any closer to expiry. We’re recommending that you buy back the PUT and sell the CALLs and close this puppy out for a $1.20 gain. Accounting for minimal commissions, that’s an even 700%.
And that’s just fine.
Our last trade on the dock today is from the 13th of September, just two weeks back, in a letter called Sell Everything! In that missive, we recommended you buy the SPY November 214 CALL for $5.31 and sell the SPY November 214 PUT for $5.27. Total debit on the trade was $0.04.
And today, the spread between the two has widened sufficiently for us to urge you to sweep the thing clean. The CALL sells for $5.72 and the PUT for $3.51. Sell the former and buy back the latter, and you walk home with $2.21 on $0.04 expended. That’s a very healthy 5425% in a fortnight.
We’re going to close out our letter today with a trade that has a longer time horizon – the longest one we can give it, in fact.
It’s our bull market, poster-child trade, featuring none other than the world’s greatest time-waster, the dearly beloved informer for spy agencies across the globe, the master collector of personal data and all-round lover of government intrusiveness – Facebook Inc. (NASDAQ:FB)
Take a look at the chart –
This is nearly three years of FB on a weekly basis. We offer it to point out the long term, bearish rising wedge formation that will be triggered once the stock breaks below the lower trendline, now at 120.
And while it’s true, the stock could bounce around between the two lines for quite a while, the formation is reliably bearish, and we’re going to give it enough time to work.- Content protected for Normandy Executive Lounge, Wall Street Elite, Executive Lounge members only]
With kind regards,
Hugh L. O’Haynew