CMG/Pat - Don't get too excited, just a weak bounce off $300 so far:
$500 to $300 is a 40% pullback and down $200 means the bounces are $40 just to be weak - not even close yet. $10 is a weak bounce off the more recent leg down so if you can't even make that - you are still in trouble.
Pot/Pstas - You mean the price of a weed goes down when it gets legal? Shocking! I grew up in NY and I knew a dozen kids who were able to grow pot on their property - and these guys didn't know anything about growing plants other than put the seed in the dirt and water it. If it's legal to smoke - it's way too easy to grow for these prices to last. Still, MO will be thrilled to sell you 20 joints for $20 in a pack and people will pay for convenience and quality control - that's where the long-term money is.
It's been a while since MO was cheap but they took a nice refreshing dip yesterday and now we can add the following plays:
In the OOP:
- Sell 5 MO 2019 $55 puts for $3.75 ($1,875)
- Buy 10 MO 2019 $57.50 calls for $8.70 ($8,700)
- Sell 10 MO 2019 $70 calls for $3.20 ($3,200)
That's net $3,625 on the $12,500 spread so we have $8,875 (244%) upside potential at $70 and we're $6,500 in the money to start.
In the LTP, we can afford to be more aggressive:
- Sell 10 MO 2019 $60 puts for $5.65 ($5,650)
- Buy 20 MO 2019 $57.50 calls for $8.70 ($17,400)
- Sell 20 MO 2019 $70 calls for $3.20 ($6,400)
Here we have a net of just $5,350 on the $25,000 spread with $19,650 (367%) upside potential.
