Church and Dwight spread with yield up to 213%

Buying a Bull Call Spread in CHD.

music selection:  “Va-T’en Pas” — France D’amour

weigh-in:  220.4 (1.0)

Right on schedule, I’m making another trade Monday morning. This time, it is a bullish trade in Church and Dwight (CHD), the maker of such household staples as Arm & Hammer products. The company steadily grows sales a little less than 2% a year and has done so for decades.  This is a defensive move with the election coming up.

With shares trading at 93.63, I went into the money for the 85/90 strikes bull call spread with 20NOV2020 expiry. The trade will be in force for about 54 days. I got 3.80 pricing on five spreads putting 1,900 in capital at risk. Should shares fall no more than 3.88% by expiry, I will earn the full profit of 600 dollars. That is good for 32% or 213% annualized.

Soft hands should pile into names like CHD as the election approaches to preserve capital so I expect to earn the full profit here.