MDLZ/Idi - They had great earnings with expanding margins, up 5% today. And at the top of the range but I don't think they get to $50, as they'll be lucky to hit $2.50 in earnings so that's 20x though they are aggressively buying back stock - it probably accounts for half of their earnings PER SHARE improvement. Of course, that's good for the Butterfly so we can add a play but we'll lean towards being a little channel bearish as follows:
- Buy 20 MDLZ 2021 $38 puts for $2 ($4,000)
- Buy 20 MDLZ 2021 $55 calls for $1.70 ($3,400)
- Sell 5 MDLZ 2020 $42 puts for $1.80 ($900)
- Sell 10 MDLZ March $45 calls for $1.67 ($1,670)
So we're netting into this trade for $4,830 and we're using 43 out of 715 days to make $1,670 (though already included in the net) so that's one of 16 periods we can sell. 15 left x $1,670 is $25,050, which would be a lovely return on $4,830 but, of course, not all the sales go perfectly but it's a great start and we can sell more puts if they go lower (and roll down our long calls) but, for now, I love spreads where we spend $4,830 and look forward to 6+ $1,670 (35%) sales during the year - beats the crap out of waiting for dividends!
For Top Trade Members: Remember we do not follow up on these short-term call sales in Top Trades, that's something you can follow in our Butterfly Portfolio in the Live Chat Room if you wish to upgrade.
