Posted in
Daily Report
By: Tom Gentile
on February 10th, 2022
A PB&J sandwich for many is a delicious and filling sandwich and here is an option strategy one can consider on a stock that specializes in the production of good old PB & J: Peanut Butter and Jelly.
The company is the J.M. Smucker Company and here’s to the prospect of this trade being just as delicious and filling… of cash in your pockets!
Of course, this ins not a recommendation as I am not a Registered Investment Advisor (RIA), Instead it is an example of an option strategy that could profit if the stock moves higher by expiration (or in this case its earnings report).
If you find today’s stock market confusing with all its volatility, my intent is to help make some sense of how one can still potentially profit despite that.
New Opportunity for a Money Calendar Setup with a Start Date for Tomorrow (February 11, 2022)
The J. M. Smucker Company (NYSE: SJM)
Interesting at time to see what sector companies are classified as. SJM is classified as a Consumer Defensive. To me that means if the economy is deemed in rough shape and companies may face challenges moving their product the good thing about a SJM is people will still NEED their products.
It will be tough for folks to skimp on their favorite coffee, their kids peanut butter and jelly or their pet’s dog food.
I am not saying the economy is in bad shape, but I am showing you SJM has a bullish pattern that and thus a bullish option trade is going to be shown.
Here’s the Money Calendar data, which is the catalyst for the option trade that will follow.
Call Credit Spread — Here is a Call Debit Spread option trade for SJM:
This is where one could Buy to Open the Mar 18, 130/135, Call Debit Spread
Normally, we buy debit spreads with an expiration just past the end date given from Money Calendar.
In this case, and often times when we are in earnings season, these patterns have end dates that are past an earnings announcement date. This one is Past the end date because, there are no weeklies for SJM, otherwise we would have chosen a Feb. options expiry.
Earnings are due out on SJM February 24, Before Market Open. Win, lose or draw, by the close of market the trading day before , Wednesday, February 23 it would be wise to close the trade – I would.
I’d love to show you another option trade of the Sell a Put Credit Spread variety, but what tends to happen going into an earnings report is the options IV will increase.
If we sold a put credit spread we would want to buy that back ‘to close’ at a lesser price and with the prospects of IV increasing and that resulting in the option price increasing buying it back to close for a lesser price becomes more challenging. Let’s stick with this Call Debit Spread.
App: Toms Option Tools
Market Insight articles may show images of lists of stocks meeting a variety of options parameters like Unusual Call and or Put activity or Expensive IV found on my app Toms Option Tools.
Other times I will have other charts may work to amplify my educational points.
Those options data lists, however, can be found on my app Tom’s Option Tools. Use your device to search up and download this app and get free access to the Morning Reports section of the app.
Other parts of the app are available at a premium subscription rate, but the Morning Reports Lists are yours free.
Disclaimers
Stock and options trading has large potential rewards, but also large potential risk.
You must be aware of the risks and be willing to accept them in order to invest in the stock and options market. Do not trade with money you cannot afford to lose.
This is neither an offer to buy/sell/ or recommend a particular stock or option.
Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been actually executed, the results may have under or overcompensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with hindsight.
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