Another ugly day in the market today with the #SPY down 1.75%. Think about this for a moment! The SPY represents the 500 largest companies that are listed on the US stock market. The total market cap is approximately $45 trillion! That's almost the same as the combined GDP (based on 2017 data) of 188 countries.
In short: $45 trillion is a big number...
Now think about this: the market value of these 500 companies dropped by about $780 billion today. That's right! In 6 hours and 30 minutes.
How is that possible?
The key contributor to this enormous drop is the fact that one person made a decision to send troops to occupy another country. There are obviously many other factors, such as inflation, virus, chip shortage, etc., that also contributed to this drop but none of these factors were comparable to the #Ukrainian crisis.
But enough of the politics and let's get back to business.
My today's top pick is #AAL (#AmericanAirlines).
This company closed at $16.64, which I believe is an incredible value especially given the fact that the Covid hysteria is finally appears to be diminishing and air travel is slowly returning.
As we can see on the monthly chart below the stock only went below $16 during the Covid related market collapse in 2020 in the past 9 years or so. The P/E is in negative territory and the Price per Tangible Book Value is also in negative territory, which means that at the current price you can buy $1 worth of tangible asset for less than $1, which puts this opportunity into a #NoBrainer category for me.
Due to the high IVR the April $15 put is currently trading at $0.72 so the brake even point is $14.28 (15-0.72).
The stats
Strike: $15
Expiry: 14 Apr
Delta: 36
IV Rank: 47.5
Premium: $0.72
Cap Req: $179
Annualised Prof: 294%
Another beautiful thing about this opportunity is that the stock price is so cheap that even if the trade works against us it does not have a major impact on our portfolio.
Nice winner!
This one can be closed at $0.55 for a $17 profit.
You might think: that's not much at all.
But think again!
You invested $179 2 days ago and made $17 profit. That's a 1733% annualised return!