Postcards: A Free Trade
Occidental is the play...
Market Update: Banking stocks are breaking out, and it’s a very good time to think about buying into names like JPMorgan (JPM). Post-tax season… and post-earnings, there is some stability in the banking system that wasn’t expected. Selling credit spreads in the sector is the cleaner way to go. Another insider trade might come in the next 24 hours after we take action on Occidental (OXY). There will be a lot of chop over the next month, so you have to sell credit spreads on stocks you’d want to own for the long term.
Dear Fellow Expat:
I am writing this from my daughter’s gymnastics class. I just watched a 15-year-old do a forward flip without a wind-up. I have never felt so unathletic.
On the other hand, my wife and I are debating money.
I bought two Taylor Swift tickets for Miami at a rather obnoxious price last fall.
Well, they are now going for 140% more than I paid.
We could live for free in Fiji for a month.
Is my wife selling?
Nope.
As Jeff Joseph, the publisher of Luckbox Magazine, described it…
I’m in the Tortured Husbands Department.
Buy Your Own Tickets
Take what the market is giving you.
That’s one of the key rules of trading and investing in the Florida Republic.
I gave away a free trade over at Republic Insider.
My publishers are probably mad at me, but it bears repeating…
Take what the market is giving you.
This will never happen again…
Otherwise, Jamison will send me a very sternly worded email.
Buffett Buys
As you should know… Berkshire Hathaway (BRK.A) likes Occidental Petroleum (OXY).
But we don’t want to buy the stock at the current price.
Instead, we want to trade around what we’ve called The Buffett Buy Zone.
Buffett hasn’t been buying the stock when it’s at all-time highs. He’s been buying shares between $56 and $62. And we want to do the same. These are the last four Buffett purchases of the Texas-based oil company.
So, why sell credit spreads?
If the stock goes up, the value of the spread goes down. As a result, we make money.
If the stock just trades sideways, the value of the spread will decay. As a result, we’d make money.
If momentum is positive and the stock pulls back, we’d be happy to own it at a lower level. But if momentum goes negative, we can just cut our losses and look for an opportunity to reenter this position.
And that’s it.
Buy something for less… at worst.
That’s all.
Back to dad mode.
Stay positive,
Garrett Baldwin
Secretary of Defense
GB, please highlight how many times we've played this! Easy money in my bucket!