Five Inflation Fighters Set to Fly – Part 2

This is a continuation of yesterday's post, which laid the background for our inflation premise and discussed F as our first trade idea.  That means we'll need 4 more to round this set off and the chart on the right, from Bespoke, illustrates another premise we've been touting since the Fall – BUY AMERICAN. 

F is American, of course and one of the reasons we like them is that most of their revenues come from domestic auto sales and domestic financing.  As you can see from the chart, there's a pretty strong correlation between NOT relying on Europe and Asia and market performance this year.

We already took a stab at CLF at net $19.90 in our Income Portfolio on 2/26 and added another round (through short put sales) at net $13.50 on 3/27 and, if we can double down again at net $10 – we probably will but for now, and as a new trade idea – I'm very happy with our recent sale of the 2015 $18 puts, which are now $5.25 for a net entry of just $12.75.  As with Ford, this is a margin-efficient sale with a net margin of just $3,551 to collect $5,250 for selling 10 contracts.  Doing nothing else on this trade can return up to 147% on margin in 20 months (Jan 2015) and all CLF has to do is struggle back over $18 – from $17.63 today (2%).