Monday Prep

Going over the trades still open for this week I conclude the following.

• Taiwan Semiconductor Manufacturer is down by 34%. TSM we keep since it will play a huge roll in the Semiconductor supply, which is in short supply. I do not expect this company with such great fundamentals to break down now. The fundamentals always win over lines in charts, always. Expiration for the call position is 16th of July. Plenty time!
• GM Calendar Spread. The 4 Short Calls are up 1000% and about to expire. Great, I can keep the premium from the Calendar Spread. The 4 LONG CALL contracts for GM we also will keep even though it is sometimes hard to watch. BUT, I totally believe that this market only encounters a temporary dip and then will recover. We hope this position will be in the money by Expiration on June 18th.
• Fortinet Inc, FTNT, Nice little Profit of 3%. I closed it for VIX reasons.
• United Guardian is hoovering since a while. This short position is getting expensive. The spread is 60 Cents and I didnt know, When it starts on Monday it will be in a hole even though it is showing a slight gain of 1%. Will keep it for another day and hope the market will drop further. This Short should also drop if the market drops. See charts:
  
  
  
  
  
• Apple didnt move and triggered the hard SL. Rule! minus 10%
• American Tower Corp made a good run this month. Plus 3.6%
• Macy's made a good run but broke down in the end due to being a Cyclical Retailer going with the S&P. Plus 1.69%
• Despegar Com Corp, DESP, Another short Position with an south American Tourist Booking Service that didnt work out. More Research needed for those. Minus 38%
• Acceleware is the Winner this months with a 28% gain. We will keep it.

There are a few more positions that are not doing well but also did not trigger any major Stop Loss Orders. Most of them will be closed tomorrow since I believe the market might turn into a correction for a week or two. I will be looking into buying some PUTs for the SPY.

3 long contracts of 31st March, $380 PUT SPY.

Macro Economic Decisions for the week March 1st to 5th, 2021

Leaving the last post with the possibility of a retracement in the S&P500 I will now take a look at the Macro Economics. The IMS is coming out next week and will play a roll further down the road in 3-6 months. I do not expect major changes in the numbers. ISM determines the S&P500 within 3-6 months and the S&P500 is a leading indicator for the GDP 3- 6 months further down the road. Thus, we are covered for the big picture. Looking back 3-6 months.

ISM, manufacturing sector it all looks pretty much like recovering.

Since AUG to NOV 2020, the economy is recovering in numbers. I dont expect the numbers to change a lot when FEB numbers coming out next week. Production Orders are picking up and so is production. The delivery shortages are prone for employment increase. companies need more drivers and trucks on the road!

Employment numbers are usually 6-12 months lagging and I expect them to rise with the Non-Farming Payroll release data. But companies are hiring! Prices rise when demand is rising. This is also a good sign of recovery. Export and Import are also improving. These numbers painting the picture of the current market.

The Building Permits.

Building Permits raise some concerns IMO. The new numbers in January show a huge jump of about 10.34% compared to December. The increase is steep! While the authorized permits drastically increased the completions are down. I hope that will balance it. We will see in a month or two from now.

For now I can say Building Supply chains and construction will be up in Spring and summer. And with it come home outfitters and banks. They will do well!

GDP and S&P500

We see an constant rise of the S&P500, 4th column in, as well a slight dip in the GDP production in Q4 2020, 6th column in. If the S&P500 rises and the GDP falls the market becomes unpredictable and positions should be closed or moved. This only happened 8% of the time since 1954. The new numbers come out in April. Still far out.

China PMI Index

What we see is that China had a peak in November 2020 and the orders are declining since. The red line is the AUD-X measured in USD. It is still up but I expect it to turn. Companies that doing huge amount of business with China are getting ready to be shorted. They are losing business. Australia's export is depending hugely on China. So when the Chinese slow down the AUD will fall. Take my word and remind me in a few weeks.

This is the reason for slow down and fall of the AUD by 4.5%. Here is something to watch out for. Opportunities coming along the way.

There is nothing that shows a further decline or huge impact on the world economy. And when the US economy is doing well the world is doing well, too

So lets take a look at the trades from last week and what it means for the coming week.

Week of 22 - 28 of February in Review

OK this week was kind of rough for the unexpected. I am not even sure if anyone outside of the game noticed the small changes since Tuesday. My positions are down broadly. Lets go over a few trades and things that happened.

What happened?

First I notice an uptick in volatility. The "Shooting Star" at one point in its life time, was a totally BLUE candle. All the way blue to the top. Then it collapsed and left behind what we call a shooting star. It usually means, depending what you read or believe, depending on the color it increases the possibility of an increased volatility over the next few days. If it was red then the bones would tell a different story. I only noticed the volatility increase since Tuesday. 

What does that mean?

Created by the Cboe Global Markets (originally known as the Chicago Board Options Exchange (CBOE)), the Cboe Volatility Index, or VIX, is a real-time market index that represents the market's expectation of 30-day forward-looking volatility. Derived from the price inputs of the S&P 500 index options, it provides a measure of market risk and investors' sentiments.
If the VIX Index goes up by 25% the whole worlds investments are 25% more at risk in a 25% more volatile market. And since we are in a stretched BULL Market we can expect a correction. This increased volatility wont make the market shoot up even steeper and we should all buy more stocks, NO, it means the opposite even though in theory it can mean both, up and down.

Volatility is the hedge fund managers worse enemy and the traders best friend!

It means for me assuming the volatility over the next 30 days might increase I am supposed to liquidate 50% of my positions starting with the worst losers. 

On Monday a lot of people might be doing exactly that. 

What are the markets showing?

Thursday and Friday we saw this developing.

When the S&P goes down, the market is down. Pure and simple.

Thats why my positions are down where I am long and up where I am short. Beside that the S&P is down for two days, the DJI is down as well and the DAX is flat since 2 weeks! We can see a dark cloud in the copper prices as well.

If we take a look at ARK EFT Investments we also see that Cathie Woods is loosing ground and is letting go on some positions in her portfolio. 

Lets look at the S&P500 since Covid!

The markets grew big time in 2020 after the Black Swan event of the China Plague 2020. The S&P gained more than 50%. 

2,300 Pts to 3,900 Pts. We see no big Bullish Flags or mega corrections since one year! The market is bullish but a lot of people start talking about a 10% correction. This would mean for the S&P500 a drop of about 400 points to 3,550! 

Alright. Lets make some money!

Why I do not think this will be a mega retraction? 

See the next post

General Motors vs Ford. A Market update.

Generally speaking, S&P500 and the DJI are flat since 9 days and down today. The Volatility Index is up and raises concerns in the market sentiment. The Germans and DE300 are flat but not down and Copper prices are up, great news and so is the AUD, which indicates great business for Australia with China.

I bought my CALLS at the green triangle when it was about to break the $57.06 resistance level. It dropped two days later and hoovers at that line since 7 days. My position lost about 33% of its value.😁. GM is following the market sentiment and so is Ford. 

Taiwan Semiconductor vs Intel Corp

I hope this will make some money. I bought two CALL Contracts, 16 July, 140 Strike.

TSM is mainly the Apple Supplier for chips and will build a factory in Arizona for 12 billion Dollar. It will be part of the new 3nm technology. This is the additional load of debt they took on in 2020. 

Taiwan Assures Support For US Auto Chip Shortage: Reuters

22 Feb 2021 09:10:45 AM | Benzinga

Taiwan Economic Minister Wang Mei-Hua acknowledged receipt of a letter from the White House on the global shortage of auto chips and assured a resolution, Reuters reports.

Automakers including Volkswagen AG (OTC: VLKAF) (OTC: VLKPF), Ford Motor Co (NYSE: F), and General Motors Co (NYSE: GM) resorted to production holidays to beat the crisis with strong possibilities of reduced production going forward.

U.S. chip companies, including Intel Corp (NASDAQ: INTC), Qualcomm Inc (NASDAQ: QCOM), Micron Technology Inc (NASDAQ: MU), and Advanced Micro Devices Inc (NASDAQ: AMD), reached out to President Biden for a possible solution. Incentives were promised to Samsung Electronics Co Ltd (OTC: SSNLF) for a New York plant. Apple Inc’s (NASDAQ: APPL) major chip supplier Taiwan Semiconductor Mfg Co Ltd (NYSE: TSM), is looking forward to a $12 billion chip plant in Arizona to come online by 2024.

Reportedly, Wang met the local chip makers previously on the issue. “Going forward, manufacturers are doing what they should,” she said.

The chip shortage has become a diplomatic issue as Germany’s economy minister has also written to Wang asking for help.

TSM plans to raise its capital expenditure to $28 billion this year to resolve the crisis.

Price action: TSM shares are down 1.47% at $134.64 in the pre-market session on the last check Monday.

TSM vs INTEL

My thoughts on TSM and my position

Looking into Taiwan Semiconductor Manufacturing Corp.

Who is TSM?

TSM seems like a good company well positioned in the semiconductor business. We all know that GM and Ford and iPhone and many others are having hard time to secure chip production on time for their production line. Chips in all smart devices are in short supply. Hence semiconductor producers will increase production to supply high demand. This will increase their revenue and profit margin. This I hope will drive up share prices above market average. If it only increases as the market (S&P500) does then we should buy the market, SPY ETF.

I picked TSM as one of the better options. It is one of Taiwan's biggest companies and delivers chips to clients all over the world. TSMC produces more than 10,000 products for almost 500 clients worldwide. Even giants of semiconductor production, such as Advanced Micro Devices (AMD) have TSM to produce their chips!

In fact, the company produces chips for some of the largest names in the world. Apple accounts for about one-fifth of TSMC's annual revenue and North America is TSMC's largest market. Thus, all auto makers like GM and Ford, and also tech companies are depending on TMS and some others. North America brings in more than 65% of the company's revenue.

https://www.investopedia.com/articles/markets/012716/how-taiwan-semiconductor-manufacturing-makes-money-tsm.asp

TSMC is the archetype of a company that exploits Moore’s Law. This is the observation that transistors halve in size or more accurately, double in performance per area every two years. If we’re nearing the theoretical limits of Moore’s Law, no one bothered to tell Taiwan Semiconductor Manufacturing. The company has everything from 90nm tech to developing 5nm tech. The company hopes to have 3nm fabs ready in 2023, possibly spending a reported $20 billion on the technology.

Their revenue Growth Rate increased from 5% to 25% in 2020. They increase their Operating Income  and Free Cash Flow. Current Ratio (above 1.5) and Total Debt to Equity Ratio (below 0.3), are great numbers! In 2020 they increased their long term liabilities 6 fold. This is huge. This capital is invested into the 3nm Fabrication to be ready in 2023. At the same time their current liabilities outrun their long term liabilities. Rapidly growing Enterprise value is due to increased loans taken in 2020. Liabilities are part of the enterprise value since you as a potential buying would have to assume them.

Earnings Before Interests, Taxes, Amortization and Depreciation. went up from 35-45%. And so is the Operating Margin. I expect the Revenue to grow similar to last year or even better due to the shortage. 

All Prices in TWD, 27 TWD = 1 USD

TSM

We can see the Revenue Growth and I assume it will continue this way due to the shortage.

I will be buying two contracts of 16 JULY CALLS, $140 Strike for $12.60

My prediction for a 6 months price for TSM in 2021 in June 2021: $175.

Fortinet (NASDAQ:FTNT)

Looking at Fortinet.

I worked on this report for four days now. And I also had to reverse it to a draft since I changed the graphs. Also, the purpose of this exercise is to generate a template that with little input data can evaluate a bunch of companies within an industry and find me the very good ones and also the very bad ones. It also helps me to understand the ratios in the financials to make companies comparable across he sector or even industries. percentages work pretty well doing that! I am an Electrician by trade and a general contractor before, I love numbers. Numbers dont lie. People lie, almost always. ....

Fortinet was founded in 2000. IPO 2009. 11 years on the market. A relative young company. A global player in cyber security and AI.

Potential Catalysts:

• Most of Fortune 500 companies are customers
• It has access to large corporations and governments
• Analyzing 10 billion events through AI and Machine Learning systems, daily.
• The founder is still part of the company.
• Cloud cyber security with AI
• Integrated platforming for various cybersecurity components.
  
  

Key Industry Takeaways 

× We expect spending in the cybersecurity market to remain elevated as regulations severely ratchet up data breach fines and malicious actors attempt to benefit from the latest networking trends to expose entities with outdated security postures. We think the $100 billion-plus cybersecurity market will grow at a five-year CAGR of 9%, and we expect certain areas, such as security for cloud-based workloads and applications, alongside automation solutions, to outpace more traditional offerings. In our view, some vendors will benefit disproportionately, and this rising tide will not lift all boats. 

× The amalgamation of on-premises and cloud-based resources into hybrid-cloud networks, plus software as-a-service applications and mobile users being ubiquitously connected, forever changed the security perimeter. This has spurred new ways to develop threats, including cybercrime as a service. In turn, new opportunities have developed for on-premises security vendors to proliferate their offerings outward and the creation of born-in-the-cloud security vendors. As more entities suffer breaches through their public cloud instances or by mismanaging their cloud-based resources, we believe the realization that public cloud security is a shared responsibility will be a boon for the established security vendors. 

× We believe that the cybersecurity vendor landscape will be shaped by success in three major themes: security for hybrid-cloud ecosystems, cybersecurity platforms, and automation.

Source:

https://ws.questrade.com/researchdata/1.0/reports/download/956885_500.pdf

Key Company Takeaways 

× We believe that Palo Alto Networks is using its leadership position in firewalls, the largest portion of product-based cybersecurity expenditures for entities, and its cybersecurity platform approach as a springboard to gain wallet share for cloud-based security. Its focus on developing and supplementing security teams with automation capabilities to alleviate pain points will be a difference maker, in our view. 

× Cisco Systems' interweaving of security and networking solutions as a one-stop shop for IT teams should keep it as a formidable player. While security is only a fraction of the overall company, we believe that the building out of a security platform to span the needs of on-premises networks and cloud resources makes Cisco well positioned. 

× Firewall players Check Point Software Technologies and Fortinet are building out their security platforms to include solutions for cloud concerns. We expect both narrow-moat companies to remain industry stalwarts but to be less aggressive in the push to diversify into cloud-based security and automation. 

× Being born in the cloud for the networking environment of the future has made Zscaler a disruptive force in the security market. In our view, Zscaler will remain a mainstay in cloud security and is evolving its portfolio to contend with established players attacking its beachhead. 

× No-moat FireEye and NortonLifeLock have not carved out sustainable competitive advantages, and we do not have confidence in their ability to deliver excess returns on invested capital. FireEye's sandboxing 

https://ws.questrade.com/researchdata/1.0/reports/download/EQR_0P0000L1GP.pdf

What are the financials saying?

Benzinga Fortinet (NASDAQ:FTNT) reported quarterly earnings of $1.06 per share which beat the analyst consensus estimate of $0.97 by 9.28 percent. This is a 39.47 percent increase over earnings of $0.76 per share from the same period last year. The company reported quarterly sales of $748.00 million which beat the analyst consensus estimate of $722.36 million by 3.55 percent. This is a 21.74 percent increase over sales of $614.40 million the same period last year.

What I like on FTNT Financials

• With 2.5 Billion Dollar sales FTNT is not the biggest company BUT with a huge potential.
• Operating Profit /Margin comes along and hits 20%. COGS and SG&A are deducted.
• FTNT sales /Revenue grows annually by around 20%
• Operations are very profitable, > 20%. More Profit is retained from operation
• FTNT is growing Free Cash Flow at 30%. This gives them a huge cushion for investments.
• We see the EPS approaching the $3.00 mark, which looks solid to me since it is a steady climb.
• The Current Ratio indicates that the company can pay for its short term debts. It should be always above 1.
• The Total Debt to Equity Ratio also shows that the company is NOT financed by debt and has room to grow and breath. This Ratio should always be below 1
• We can see a solid spending in Capital Expenditures. 
• The P/E with 50.94 is three times the historical average value of the S&P500 of 16.8 and seems high!. It could be overpriced.

FTNT

FTNT

A solid portion of the company's operation income flows back into the company! About 11-12%

FTNT

All indicators are moving up in a nice not too aggressive way!

FTNT

P/E tells you the capital you have to invest to receive ONE Dollar in Earnings! 

Remember Tesla with $1,600 to make one Dollar, And remember GM with an P/E of about $54? Thus, FTNT is pretty good.

 FTNT

What are the competitors saying?

Palo Alto Networks (PANW)

• With 3.4 Billion in sales Palo Alto is a similar competitor as FTNT.
• Operating Profit /Margin was negative and stays negative, COGS and SG&A deducted.
  
• Sales /Revenue grows annually by around 20% as most of the competitors. I believe this is industry wide and has more to do with the increasing demand as pointed out and NOT with the specific performance of a specific company.
  
• Operations are not so profitable, Comes out of the negative and falls back to zero. Interesting to note that even with a continuous revenue growth of 20% the company generates a negative Net Income and has a negative Operating Income!!
• Enterprise value is increasing enormously in 2020 due to debt increase. We also can see that Stockholders' equity is decreasing accordingly due to debt!
• Current Ratio and Total Debt to Equity Ratio stay within the norm. Those two line should never touch!
• With being almost the same size as FTNT and CHKP but 1/8 of Cisco its EPS growth is negative.
• Free Cash Flow growth has also dropped in 2019 and has a falling tendency since.
• I like the portion of the Free Cash Flow that is reinvested into the company. About 20%.
• The P/E is negative for four years. The company is loosing money. It is not a short term issue.

PANW

We see short term liabilities increased dramatically in 2020!

PANW

We can here see how Revenue growth is declining, still very strong but the Operating Margin and EBITAD cannot make any profit and dwell below ZERO. 

ROE is negative as well due to the fact that Net Income is down and is compared to Shareholders' Equity. 

PANW

Last but not least, P/E and EPS Ratios. Both Ratios telling you PANW is losing money since years!

PANW

Check Point Software Technologies Ltd. CHKP)

• Fantastic Operating Margin and Profitability, over 40%
• Cash Flow Growth is improving and coming out of stagnation
• Revenue Growth is less than 5%. Not huge but consistent. 
• Current Ratio and Total Debt to Equity Ratio are within normal parameters.
• What strikes my eyes though are the EPS of $5.50!! What is this?
  Take a look at the Operating Income and we see that CHKP is only investing about 2% of its operation income in Capital Expenditures. They are saving money. FTNT is spending about 12%, Cisco 5-8%, which has a 10 times bigger budget btw, PANW between 12 to 20%. I think they might cut themselves short in innovative initiatives.
• The P/E Ratio is a little above Market average, which is the S&P500.

CHKP

Here we have very little capital that is going back into the company. That is one reason they have a huge EPS, without digging any further. Only 2% is reinvested back into the company's Capital Expenditures while all comparable competitors invest between 8% as giant CSCO, and 12-20% like FTNT, PANW and CHKP. 

CHKP

We see the EPS way up above competitors. At the same time, see next graph, Revenue is not increasing at all and dwells under 5% growth, CHKP doesnt have the market! They have very little sales compared to competition. Their EPS is artificially held up by not investing into their own company through Capital Expenditure! Are they milking the cow for as long as she gives milk?

CHKP

CHKP

Zscaler, Inc. (ZS)

To forebode the judgement, ZS is more of a joke but apparently a competition to FTNT, PANW and CHKP.

• The Free Cash Flow Growth is all over the place, up a 1,300%, minus 114%$, seems to be a one time sale of huge proportion?
• Operating Margin and Profitability is below -10% and -20%. It seems this business cannot operate in a smooth way.
• In contrast we have a outstanding Revenue growth between 40 and 60%. Why is this when everything else is lagging?
• Another interesting thing is that Current Assets quadrupled last year without that the increasing share price could haul water for it. Also sales increased greatly but not 4 fold!
• It is also a very small player in the field compared with the Revenue of the competition.
• The P/E Ratio is overpriced! You pay $224 for 1$ of profit. This company is overvalued.
  
  

ZS

Current Ratio indicates that the company has 3.5 times more current assets than current liabilities while at the same time current liabilities doubled and current assets tripled!! Where are the current assets coming from? We see a huge debt increase in 2020. The Operating income indicates the company cannot pay its liability with its operations since it is increasingly negative for 4 years.
Enterprise Value is exploding due to the debt they collected in 2020
This company could be a SHORT but not a buy.

ZS

ZS is investing 50-60% of its Free Cash Flow back into the company.

ZS

This company doesn't give me a good feeling at all. Someone must have bought a huge amount of shares and invested in this company. Who is that?

ZS

Cisco, Inc. (CSCO)

• The Behemoth on the field, Its revenue is 25 times that of the competition.
• A solid Operating Margin as well as a Operating Profitability around the 30% mark
• Cash Flow Rate and Revenue Growth are declining. 
• A Revenue growth rate between 5-10% I consider a sustainable growth rate.
• Operating Profitability and Operation Margin should be around 20-30% 
• With an P/E of 37.41 you pay twice the average of the Market for a 1 Dollar Earning
• Stock holders equity is increasing because the company reduced its debt in 2020 and hence Enterprise value, which includes debt, also came down a little. Good news.

CSCO

Revenue Growth is declining a little but not of a concern since it is all over all very strong.

CSCO

Current Ratio and Total Debt to Equity Ratio are further improving. They are above and below their limits where they belong. This company will have room to obtain capital if needed.  

CSCO

With an EPS at around a 1.20$, this company is pretty steady. The share price is not increasing either over two years and also pretty steady and with a relatively low P/E Ratio this company is not specifically a growth company but if you like dividends maybe something to consider. $0.36 Dollar / share every 3 months. On  an annual base it is a 3.2%. More than you get at the bank!

Now that we are here...

What Stock to go with in this field of cyber security?

• Zscaler, Inc. (ZS) I would exclude mainly for their huge debt increase in 2020, unexplained asset growth, and negative Operating Margin.
• Check Point Software Technologies Ltd. CHKP) I would avoid due to their high EPS while having a low Revenue Growth combined with an only 2% reinvestment into the company. I have the feeling they are milking the cow until they can.
• Palo Alto Networks (PANW) I also would reject due to its underperforming Operating Margin, declining Free Cash Flow, and the negative P/E which indicates that the company is loosing money since years. Very Risky.
• Cisco, Inc. (CSCO) has a weak Revenue Growth and declining Free Cash Flow growth. Its P/E is only twice that of the market but they are capital laden and will position themselves well for the new security threads and cloud issues. But I would consider buying it due to its long standing and its Dividends at annual 3.2%. If that is what you like.
• Fortinet (NASDAQ:FTNT) I would give it a buy. It has all over all good numbers. I actually bought it. But I will be out if it turns negative and see next graph WHY.

Last graph and question

How do all those stocks perform against the market? Are they performing better than the market or do they underperform? If they perform as the market we should buy the market, say SPY ETF. No headache. If the stocks underperforming the market we also should buy the market, right? If a stock is greatly underperforming the market we should short it.

Lets see. 

• If any line stays flat it performs as the market, S&P500. S&P500 / FTNT = a constant number as result. So is CHKP. They are performing as the market does.
• If the graph rises to the right like CSCO and PANW then they are underperforming. Why? Because when you divide the S&P by CSCO and you get an ever increasing result it means that the DENOMINATOR, CSCO, is getting smaller compared to the NOMINATOR, S&P500. You "pay" more in CSCO "stocks" or "Dollars" to receive S&P500 "stocks". So the graph rises over time.
• If the graph declines to the right like ZS it is outperforming the market. Why? Because when you divide the S&P by ZS and you get an ever decreasing result it means that the DENOMINATOR, ZS, is getting bigger compared to the NOMINATOR, S&P500. So the graph slopes over time. But ZS I deleted already before.
• Thus, These stocks are not good to outperform the market. Buy the market instead. UNLESS, YOU HAVE A SUPER CATALYST THAT HAS SOMETHING THE COMPETITION DOESNT HAVE, please tell me what it is.

One of my Screens

On one of my screens I only displays Indexes. Not all day but until the market settles within 45 minutes of the opening. It contains the US markets, the European market as well as the Australian Dollar to have a peek on China, The German ETF which pegs the DAX30, and Copper Prices.

And of course the Volatility Index!!! Showing you the increasing volatility in the market. Now the side you are on!

Entered a Position on GM today

After discussing the financials (see last night post) of GM and Tesla I entered a modified Calendar Spread this morning. Just woke up and my girls already left for work. I rushed to the computer to see the market opening at 0730 MT. GM already moved by 2 Dollar. Well this was my fear, But thats ok.

What did I do?

• I bought a diagonal spread, which is an option strategy that involves buying a call option at $55.00 strike price for 18 JUN expiration and I sold a second call at $65.00 strike price for 12 MAR.
• This diagonal spread allows me to construct a trade that minimizes the effects of time decay, while also taking a bullish position.
• Also with Selling a CALL further out of the money, OTM, it generates a credit which reduces the overall cost of the spread.
• I bought 4 contracts and sold 4 contracts.
• I just see that I made a mistake. I sold a CALL with expiration on 12th of March instead of March 19th. That latter would have given a bigger credit that the one I actually bought. Well, well. 

STO 4 Contracts GM 12 MAR 2021, 65 CALL for $1.17 = + $  468.00, Credit

BTO 4 Contracts GM 18 JUN 2021,  55 CALL for $7.31 = - $2,924.00, Debit

                                                                                  Net = - $2,456.00, Debit

As long as GM stays above 55 Dollars and below 65 Dollars until 12th of March, I am fine. On 12th of March 2021 the short position, 12 MAR, 65 CALL will expire hopefully OTM. Then GM can breach the news headlines with all the news about their new catalysts and earnings. We will have two Earning Reports in that period until June 18th. 10th of February and May 5th, 2021. So there is a lot of great potential until early summer.

The potential of the trade

Fact is the Short position has to expire and then the long position of the trade can take off like a rocket.

What are the estimates?

Shares of General Motors (NYSE:GM) were trading higher on Monday, a day after the company touted its increased focus on electric vehicles (EVs) in a widely watched advertisement during the Super Bowl.

As of 2:30 p.m. EST, GM's shares were up about 3.7% from Friday's closing price.

https://www.youtube.com/watch?v=MjMhZKmHKGk

GM's Super Bowl ad featured actor Will Ferrell making a tongue-in-cheek challenge to Norway, the country that has the highest rate of electric vehicle adoption in the world. The ad was preceded by several days of teasers and hints on social media, which drew responses from, among others, Norwegian politicians and rival automakers. 

More broadly, GM is making a big bet on EVs and it wants the world to know. That Super Bowl ad was part of a new marketing campaign launched last month, called "Everybody In," which focuses on three themes:

• Accelerating the mainstream adoption of EVs.

• Touting GM's plans to spend $27 billion on electric vehicles and autonomous-driving technology, and to  launch 30 new electric vehicles around the world, both by the end of 2025.

• Highlighting the advantages of GM's Ultium electric-vehicle architecture and batteries.