FNMA/Albo - Trump is talking about "doing something" with them and it's assumed that means getting out from Government control, which will re-direct profits to the private investors.
Oh yeah, so I got sidetracked. I was going to say I'm watching CGC et al, not just to get excited about the fund but because the MJ ETF has been holding these things for ages and their Revenues (not earnings) have been rocketing higher so I expect some good returns off MJ BUT I'm worried that there are a lot of growers and growing, especially in Canada, is likely to have an over-supply problem this summer.
This is one of those cases where "it's not a bug - it's a feature" and you can make really good money on the ETF since the premiums are so huge. I lean towards being long-term long and I'm going to make MJ the first play in our new Hemp Boca (another PSWI project) Radio Portfolio. The base play will be:
- Sell 5 MJ 2021 $30 puts for $6.25 ($3,125)
- Buy 10 MJ 2021 $25 calls for $10.50 ($10,500)
- Sell 10 MJ 2021 $35 calls for $6 ($6,000)
That's net $1,375 on the $10,000 spread that's 90% ($9,000)) in the money so the upside potential is $8,625 (627%) if MJ managed to gain a buck over the next 18 months! How's that for a first trade? Surprisingly, the net ordinary margin requirement on this is just $1,510.70 according to TOS, so it's super-efficient but likely to change if MJ has violent swings again (I think this one flew under the radar in compliance!).
For our Butterfly Portfolio, however, we're going to be more aggressive:
- Sell 10 MJ 2021 $30 puts for $6.25 ($6,250)
- Buy 30 MJ 2021 $35 calls for $6 ($18,000)
- Sell 15 MJ 2021 $50 calls for $2.30 ($3,450)
- Sell 15 MJ July $35 calls for $1.30 ($1.950)
- Sell 15 MJ July $33 puts for $2.10 ($3,150)
That's net $3,200 on our out of the money spread, which is mainly there to make sure the short calls don't get away from us.
