Call me evil. For one, I have no problem whatsoever with profiting from tobacco. On that day that you are wet, cold, covered in slime, and know you won't be able to seek shelter for another week, while having to remain motionless and silent... there is nothing in this world better than a good chaw. As you can see, this name fell out of bed while Phillip Morris (PM - Get Report) was taken out behind the barn yesterday after that form reported. This firm Altria reports next Thursday. The chart is absolutely disgusting.
The daily MACD, Relative Strength, and Money Flow would all call the investor crazy for getting involved. The Fibonacci model that needed to hold at 59, simply did not. Do yo see what did hold? That's right, the lower trend line of our old friend...the Pitchfork.
Does resistance show at 59 on any rebound? Perhaps. You know...last night they were still paying 1.23 for June 15 $60 calls. Hmm. You kids know what a buy-write is? This is my thought in minimal terms. Obviously gang. there is risk.
-Purchase 100 shares of Altria at or close to the last sale of 57.78
-Sell (write) 1 June 15 MO Call at or close to the last sale of 1.23.
This done, the investor has bought 100 shares of the stock at a net effective cost of 56.55. Very close to yesterday's disastrous bottom of 56.08. You still have equity risk. You may have to sell the shares at 60 in June if you do not cover the short options position. You'd be okay with that, right? Oh, and if you end up owning the shares for a while, they pay 4.85%. Better than a sharp stick in the eye.