The Lizard King just sold puts on CBI. This one was a little different than Friday’s at the money play on LINE. I’m more interested here in the low-ball offer than immediate income so I’ve gone out of the money for higher likelihood of getting the direction right.
I managed to get 0.76 per contract on CBI150417P00040000. Against the current spot price of 46.20, that gives downside protection of 15.06%. At the same time, the yield for 40 days is 1.9% or 17.34% on an annualized basis.
CBI is attractive here because the shares are depressed due to uncertainty surrounding one billion in litigation with Westinghouse regarding construction of a nuclear reactor. The market is missing the forest for the trees as CBI has over 30 times as much in backlog and growing. Forward profitability will be very strong, with or without a jury decision. Personally, I think Westinghouse will settle before it gets that far as their case looks very weak.
We are running out of oil and gas transportation and storage infrastructure in the United States. CBI will be the one to build a lot of the new stuff. I don’t think I’ll get a price of 40 on this tasty morsel but I’m more than happy to earn 17+% while I wait for an unlikely gift.
Devour your prey, raptors!