Use this Strategy to Reap 100% Profits as These Two Stocks Drop

Shah Gilani Apr 18, 2022
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I said it once; I’ll say it again: inflation has not reached its peak.

While some investors and traders are piling back into the stock market – misguided by news claiming that March’s sky-high inflation measures were as bad as inflation would get – veteran companies watching the markets won’t be so reckless.

That’s one of the reasons I’m watching The Coca-Cola Company (KO).

The company will report Q1/2022 results on April 25. As we get closer to that date, the stock has been in an almost perfect upward trend, gaining 14% since March 10, 2022.

For the quarter, analysts expect Coca-Cola to report revenue and earnings of $9.82 billion and $0.58 per share, which would represent year-over-year increases of 8.9% and 5.45%, respectively.

Based on the company’s history, I expect it will beat estimates.

But, I’m focused on forward guidance and whether or not the company believes it can pass along higher input costs to the consumer.

I think the company will err on the side of caution and tamp down forward guidance in the face of inflation that’s running very hot.

And I think that could cause a pause in the recent rally – and present us with our next play.

At this point, I like buying the KO May 20, 2022 $65/$62.5 Put Spread for $1.00 or less. Plan on exiting the KO May 20, 2022 $65/$62.5 Put Spread for a 100% profit or if shares of KO close above $70.00.

Next up, I’m watching Nike Inc. (NKE), the athletic apparel and equipment company.

On March 21, the company reported Q3/fiscal 2022 results that included revenue of $10.9 billion, which was up 8% on a currency-neutral basis.

Highlighting the quarter were NIKE Direct sales of $4.6 billion (up 17% on a currency-neutral basis) and NIKE Brand Digital sales increased 22% on a currency-neutral basis, led by 33% growth in North America.

Those are good numbers, but they failed to lead to any significant move higher in prices. That’s problematic considering the stock already dropped as much as 34.8% from November 5, 2021 to March 14, 2022.

I think inflation is going to be a consistent headwind, at least until it looks like the Fed policies are starting to have a positive impact.

With that said, I see shares drifting lower over the course of this summer.

At this point, I like buying the NKE September 16, 2022 $125/$120 Put Spread for $1.75 or less. Plan on exiting the NKE September 16, 2022 $125/$120 Put Spread for a 100% profit or of shares on NKE close above $141.00.

What are you watching this week? Let me know by emailing me at shah@totalwealthresearch.com or leaving a comment below. All stocks submitted to by editorial team will be considered for my next Buy, Sell, or Hold.

Cheers,


Shah

3 replies on “Use this Strategy to Reap 100% Profits as These Two Stocks Drop”

  1. ken lewis says:

    2 questions-famaliarize me with a put/spread-how do we play that? and I’ve asked before but still don’t know how to buy SPACs

  2. Mary Heinz says:

    Hi Ken! Regarding SPACs, you should be able to buy units and warrants the same way you buy stocks through your brokerage. All you need to know is the symbol for the unit or warrant in question. If you’re ever unsure of the SPAC’s symbol, you can look up the SPAC in the SEC’s database. You’ll find all of the SPAC’s S1 filings and notes on how the SPAC is listed on brokerages like Charles Schwab.

    As for spreads, I recommend checking out Investopedia’s article on bear put spreads. I have always found their articles and videos to be helpful.

  3. Mike zak says:

    I read and watch all shah”s material I am Joe avg only have a few thousand to invest and the stocks he recommends cater to different clients big money people. Most people aren’t big money, if you can’t afford to buy 1000 shares of anything how long are you gonna wait to make serious money???

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