NEW MEGA TRADE: Coming Monday
Call 866-776-0515 and ask for John Cena
OK guys, so first of all, Money Morning LIVE has shut down the special deal to access Tom’s Quantum machine (RUDE). But if you call Gabe at my special Trading Today #, he’ll still give you the discount.
Here’s that number again:
Make sure you mention John Cena, because I have a running joke with Gabe that that’s his celebrity doppelganger.
Anyway, you still have time to get in on Tom’s next Mega Trade before Monday, and these things really work.
That number is 866-776-0515 – Gabe made it just for me, so if you call, he’ll know I sent you. Wonders of technology.
OK, on to the actual story.
Liz here! I’ve got the harrowing tale of the Restaurant Bandit for you – plus, of course, a brand-new Money Calendar Friday trade from Tom.
Grab all of it right here.
A Lucky Tale for Friday the 13th
I actually don’t know why I haven’t told you the Restaurant Bandit story before, because this is one of the first and most memorable jail tales I ever heard. I remember staring into my future husband’s eyes across a plate of salad at Chili’s, listening to this fascinating story, and it sealed my fate.
Now, look what’s happened. 21 weeks!
I’m not GUARANTEEING that if you tell a girl a story like this, you’ll get lucky…but you never know.
So, the Restaurant Bandit, Mr. Chavez, is a frequent flyer. He comes to jail every fall, just when it gets cold outside, so he’ll have a place to sleep.
He has worked this out to an exact science, so he’ll get a sentence of about 6 months that keeps him in jail during the cold weather.
How does he manage this exactly? Well, every fall Mr. Chavez does the exact same thing…
He gets dressed in a nice outfit (I gather he has one put away somewhere). He goes to a nice restaurant he hasn’t been to before. He sits down and orders a delicious meal, which he eats slowly and enjoys.
Then, at the end of the meal, he gets up and strolls leisurely out of the restaurant. Without paying.
By the end of the block, he’s usually arrested.
And then he comes back to jail and, at central booking, gives a detailed restaurant review to the officers on duty while he’s being fingerprinted. He enjoyed the atmosphere of By the Docks. He thought the portions at Fogo de Chao were a little stingy.
Naturally, Mr. Chavez can only eat at a restaurant once. (I believe he has a “Wanted” photograph tacked up at Fogo de Chao). “What happens when he’s, you know, used up all the restaurants?” I asked my future husband.
He leaned across the table towards me, and at that moment, I felt the spark. It was just inevitable. This was going to happen.
“I guess he’ll move to Pennsylvania and start over there,” said my future husband. “Let’s get the check now.”
If you’re now in the mood for good food and romance, let me offer you an 11.6% gain on DE that will pay for at least a little entertainment by next weekend.
Here’s Tom’s Ghostbusters team with the story…
We’d love nothing more than to highlight some bearish Money Calendar patterns that we could then show a Long Put trade on, but the setups aren’t there.
We have been highlighting bearish Call Credit Spreads in Fast Fortune Club to take advantage of the market slide. The Call Credit Spread is set up based on where we don’t think the security will be at expiration. And we keep the expiration date real close, from 7-14 trading days.
Call Credit Spreads benefit with the passing of time, so each day that goes by with the security price being the same the option should see profit.
That’s because it costs progressively less and less to buy it back to close, compared to the premium at which we sold to open.
Normally in Money Calendar, we want 20-30-day patterns and we just aren’t getting many if any at all that length on the bearish patterns.
We want to see a positive Power Meter to show the profits over the period of days over the past 10 years are getting larger in the most recent few years vs. the 10-year average.
And we like to see an average profit move of 3-points or better over the pattern amount of days.
Those have been hard to find, so we’d rather do one of three things:
- Find a bullish pattern on a stock in a select sector that is holding up better than the others in this bearish market environment…
- Opt for a Call Credit Spread.
Case in point: look at this bearish setup on Deere & Company (NYSE: DE). It is a 4-day pattern, so not long enough for a straight long put opportunity, but short enough that we researched a Call Credit Spread opportunity.
Option Scenario: Call Credit Spread
The max risk in this 2.5-point wide spread is $2.24 ($2.50 less the credit of $0.26 = $2.24).
But if you can collect the full $0.26 on $2.24 risk the potential ROI is 11.6%.
And if you think 11.8% isn’t that great – realize that this is a potential 11.6% for only a 6-day trade or almost 2% ROI per day! Our goal is usually 1% ROI a day on average, and this beats that expectation 2 times over!
My tools, www.tomsoptiontools.com , also show the probability of profit at expiration is 97% which is rather good in our view. We’ve shown probability of profit on past scenarios here in the 70% – this is much better in that regard.
In order to realize max profitability, the full $0.26, DE needs to be trading under $400 at expiration. This way the options expire worthless, and you keep all the credit amount sold to open.
Here’s what to do:
Action to Take:
Sell-to-Open a DE May 20, 2022, $400 Call and on the same order ticket Buy-to-Open a DE May 20, 2022, $402.50 Call for a Net Credit, or limit of $0.26 or $26 per contract.
Enter as a Good-til-Canceled (GTC) order.
Liz again – I hope you have a fantastic weekend.
Don’t forget to call John Cena before Monday: 866-776-0515
And stay out of jail, if you can.
May 13 2022