Buyback Perplexity? Try Italy. (EWI,GLIBA)

Buyback Perplexity? Try Italy. (EWI,GLIBA)   Our partner in crime here at The Modern Bull, Her Majesty’s Senior Liege, Hugh L. O’Haynew, earlier this week outlined a quasi-criminal project so widespread in corporate circles today that the Securities Exchange Commission felt compelled to investigate it.   The transgression?   Corporate insiders selling their holdings on the heels of share buyback announcements. And one might wonder, what’s the big deal?  Fellow wants to turn a buck; let him sell into strength.  Hell, let him sell whenever he wants!   But there’s more to this little trickster play then meets the eye, my innocent little doe-eyed peach.  For the endgame may not be so straightforward as ‘turning a buck’, or cashing in to pay for daughter Wilma’s graduation dress.  Oh no… Conspiracist Banter There are those of us in the investment game who are more jaded, you might say, and can’t help but think that these sales are coming precisely now because corporate players are worried that the highland jig is up.  And they’re implementing the buybacks as a prop to get out of their positions at a time when confidence is thinning and mom and pop market participation is thin-thin-thin.  …

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A ‘Rising Sun’ Pairs Trade

Before all else, we’re going to revisit and close down a profitable trade. It’s a pairs move that we launched about six weeks back in a letter called Apples Fall and Cars Go Vroom!, in which we recommended he following action – buying TSLA April 230 CALL for $3.90 and selling AAPL April 135 CALL for $4.10. Every pair traded credited you $0.20. Our thinking at the time was very simple – technically, AAPL was due for a slowdown, having just achieved ‘overbought’ status by striking the RSI 80 level. TSLA, by contrast looked to have bottomed after hitting long term support and seemed to be headed higher. What happened since? Our prognosis for the two stocks proved accurate. Unfortunately, we didn’t give the set a long enough time horizon to diverge as we’d have liked. At the end of this week, both options will expire, and we’ll take in some cash – but it won’t be a wham-doggy affair. The numbers look like this – The TSLA CALL is currently at $0.19 and the AAPL CALL is trading for a mere pennies. Our advice is to take the $0.19.  As measly as it may sound, when you add it to the original $0.20…

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