Bought a BPS in CLX.
music selection: “Rock This Place” — The Fabulous Thunderbirds
weigh-in: 209.8 (1.6) – Nine consecutive weeks of progress and under 210#! Highly recommend the thermogenic fat burner product “Burn XT”. Best price found at Amazon. Use smile.amazon.com to direct 1% of your purchase to charity.
The markets continue to march higher week after week. We are probably approaching a blow off top – and then a 50% or more crash. Similar to the late 90’s mania, inflows into ETFs are at record highs. The business press reports record participation numbers by Americans in the markets. As people come off the sidelines it adds fuel to the fire. But once they are ALL in and there is no one left to buy, the only logical direction is down. I’m trying to protect myself with in the money spreads that are split between bullish and bearish. Today’s trade is bearish.
Clorox (CLX) is a dividend aristocrat and big stable consumer facing company. Share price moves slowly and have been trading sideways to down year to date. It looks like a fabulous candidate for an in the money bear put spread. With shares trading at 187.92, I bought the 195/200 strikes bear put spread for 3.9542 per share (12 spreads.) I have 4,745 in capital at risk in the trade with 3.77% downside protection before profits are threatened. The trade should be in force for 26 days. Should my downside protection not be breached in that time, the full profit of 1,255 will be realized. That is good for 26.4% or 371% annualized.
I have five open spreads that are currently threatened. Things in particular look really ugly for Altria (MO). This spread was in a really good place until Biden announced a desire to regulate the amount of nicotine in tobacco products down to a level that is non-addictive. Should this be realized, it could spell the end of smoking in America. While that is in the best interest of public health, it is real kick in the teeth to tobacco investors. I’ll be evaluating this week whether to close early and cut my losses or hold out for a rally in the 54 days left in the trade.
Devour your prey raptors!