Executive Summary

• Merger denied low fares win? Spirit's survival in the industry's big league.

• Strategic trade nets 7.9% ROE: Maneuvering masterfully in merger mayhem.

Recap Situation

The idea was a Christmas present; the reality involved a seasoned judge rejecting a merger between two companies that might have needed each other to compete against the industry’s big boys. Lower ticket costs for another year or two are more important than profitable airlines - and this judge went to Harvard.... maybe that explains it.

We had assigned a probability of 33% to this outcome. We take it with composure and dignity and thank MacroDozer for providing an excellent hedge if the worst-case scenario materializes - you're welcome.

Read the full story below for further details.

Why Now

The story has played out in the short run, and our options expire in 24 days, leaving little room for trade repair in case the price falls below our break-even point again. The implied volatility remains high. If we decide to have another go at it, we will let you know in the Premium Chat, which is the second chat at the bottom in the chat room.

Trade Execution

Trade Entry - Dec 15, 2023

We sold a skewed risk-defined straddle at strikes 15.00, with hedges at 5.00 and 20.00, maturing on Feb 16, 2023. The break-even point was at 8.25.

The options chains were relatively liquid, but the bid and ask spread was wide, so we got filled slightly below mid-price.

Total: 6.75 Credit.

Trade Close - Jan 23, 2024

To close the trade, we are buying back the 15.00 call and put, and selling the hedges at 5.00 and 20.00. We got filled at 6.50, slightly more expensive than mid-price.

Total: 6.50 Debit.

Trade Return

The absolute return on this trade is

6.75 - 6.50 = 0.25

The equity at risk was 3.15, resulting in a return on equity of

0.25 / 3.15 = 7.9%

All MacroDozer articles are purely educational; they are not tailored to any particular individual or portfolio and do not constitute investment advice. Let us know if you are interested in implementing any of our ideas. We can help or point you in the right direction.

Executive Tease

• Financial deep-dive, that’s the spirit!

• Merger mazings and true values.

• One high-reward strategy.

• Merry Christmas.

Driving Forces

It's been a long summer, taking us into the cold and foggy German forests, leaving the African sun behind. An extended summer that we desperately needed to launch a regional banking series on Seeking Alpha and develop customized live courses for options trading - a response to the demand for hands-on training for the strategies we discuss. To make them more accessible. So here we go.

We have also diligently searched for rich option premiums and recently found an exciting opportunity in Spirit Airlines (NYSE: SAVE). The options currently have an implied volatility of 100% at both rank and percentile. After experimenting with various strike prices and expiration dates, we have identified an attractive setup with a favorable risk/return profile supported by fundamentals consistent with our investment thesis.

Let’s go.

Investment Thesis

Our investment thesis for Spirit Airlines focuses on a strategic options trade that capitalizes on the high implied volatility of Spirit options amid the potential merger with JetBlue (NASDAQ: JBLU). This trade, a skewed, risk-defined straddle, is designed to profit regardless of the outcome of the merger. We have determined that Spirit's standalone market value should keep us above our breakeven point even if the merger is blocked or canceled. The expected value analysis of this trade shows a strong theoretical return, highlighting its consistency with our goal of exploiting market inefficiencies for above-average returns.

Company Insights

Spirit Airlines is a notable player in the airline industry, primarily recognized for its ultra-low-cost carrier model, offering a-la-carte travel options and unbundled fares. Its fleet, one of the youngest and most fuel-efficient in the U.S., serves various destinations in the U.S., Latin America, and the Caribbean.

In recent developments, Spirit has expanded its fleet and services, adding new aircraft and routes. The airline has received recognition and awards for safety and affordability.

A key ongoing development is the pending merger with JetBlue Airways, which is expected to conclude by the first half of 2024, although this is currently subject to a lawsuit by the U.S. Justice Department.

The chart below shows Spirit’s peer group ranked by total assets. A merger between JetBlue and Spirit would make them the fifth biggest US airline after Delta, United, American, and Southwest, with more than $22b in total assets.

Merger Update: JetBlue & Spirit Airlines

Financial Details: JetBlue's acquisition of Spirit is priced at $33.50 per share in cash, totaling a full equity value of $3.8 billion and an adjusted enterprise value of $7.6 billion. This agreement includes a prepayment of $2.50 per share following shareholder approval and a ticking fee of $0.10 monthly from January 2023 until the merger's completion.

Shareholder Approval and Legal Challenges: The shareholders approved the merger in October 2022. However, the U.S. Justice Department filed a lawsuit against the merger, arguing it would reduce competition and increase fares. This lawsuit focuses on eliminating the "Spirit Effect," known for keeping airfares low.

Current Legal Status: As of December 5, 2023, the trial has concluded with final arguments. Judge William Young is considering the case and has indicated the possibility of approving the merger if JetBlue agrees to divest more assets.

Potential Outcomes and Speculations: There is ongoing speculation about the conditions under which the merger might be approved. This includes the possibility of JetBlue being required to divest additional assets. The Justice Department remains concerned about the impact on price-sensitive consumers and the overall competition in the airline market if the merger is allowed to proceed.

Financial Performance

Let's examine the key financials, focusing exclusively on those critical to Spirit's valuation. The point is to identify Spirit's fair standalone market value if the merger is blocked or canceled to determine the bottom of a potential share price collapse should this materialize in the coming weeks. Currently, the share price is artificially inflated due to JetBlue's offer of $33.50 less the $2.50 prepayment, less the twelve times $0.10 ticking fee, i.e., an offer of $29.80.

Spirit has been posting losses since the world began trying to outdo China in authoritarianism while battling a SARS virus with flu-like symptoms for most. A great time for implied volatility junkies (and the wealthy) thriving on hysteria, power struggles, and clickbait. It’s been torturous for everyone else, including Spirit Airlines.

Despite these challenges, Spirit has invested heavily in its fleet and revenue growth, boasting an estimated overall revenue CAGR of 12% from 2017-2025E, as illustrated in the chart below. The airline is expected to break even by 2025.

The subsequent chart shows Spirit’s fleet growth and load factor. The company has maintained a relatively stable load factor despite an annual fleet growth of 10.3% since 2017. However, with most competitors having a load factor north of 85%, Spirit has room for improvement.

The airline is known for its substantial non-ticket revenue, serving a wider range of customers. However, the ticket revenue per passenger has been less promising, reflecting the challenge of balancing growth and market penetration with service quality. The trends over the years are depicted in the chart below.

When evaluating costs, we focus on relative rather than absolute figures, as the latter can be misleading in a growth environment. Spirit's primary expenses are fuel and salaries, visualized relative to revenue in the following chart. Both categories, with fuel costs at 33% and salaries at 30% of revenue, present opportunities for improvement.

Spirit Airlines is not without leverage. Net debt and leases account for nearly 80% of the total enterprise value. These financing costs, at 3.0% and 6.8% of revenue, respectively, are stretched compared to pre-COVID levels in 2019.

Lastly, Spirit's cost per available seat mile is one of the lowest in the industry, thanks to its modern, fuel-efficient fleet. However, the company must increase revenues per available seat mile to return to profitability. This could be achieved by raising ticket prices and improving the load factor.

This brings us to the topic of solvency. Excluding 2020, Spirit’s average annual cash burn since 2017 was around $230 million. For 2023, our projection rises to around $330 million. Notably, if we exclude the cash burn from investing activities, the company has a positive average cash flow of $250m annually, and for 2022 and 2023 specifically, a reduced negative cash burn of $90 million only.

Assuming a future total cash burn of $300 million per year and one billion dollars in cash reserves, Spirit could feasibly remain solvent for another three years without borrowing new money, raising additional capital, or slowing down on investments.

Below, we show the development of Spirit's cash reserves in green and the quick ratio in orange. The latter, another interesting key metric that relates the most liquid part of current assets to all current liabilities, stands at 0.76x in 2023 and provides an additional picture of the liquidity situation.

Future Financial Outlook & Valuation

Before our multiple valuation analysis, let's examine the consensus growth projections for Spirit Airlines, which are essential for assessing its standalone valuation should the merger fall through.

The scatterplot below compares Spirit's projected revenue and earnings growth with its peers over 2023-2025E. Spirit is expected to outperform its peers with a significant annual EBITDA growth of 122% and a significant annual increase in total revenues of 10.5%.

Our first valuation analysis in the chart below compares SAVE and its peers using EV/EBITDA and EV/Sales multiples. Current valuations are gray, while the orange and green dots indicate the 90th / high and 10th / low percentiles over the last ten years. All airlines are currently trading below their averages.

For Spirit’s EBITDA, we had to use 2025 projections since the company is only just emerging from negative territory here, and the next-twelve-month (NTM) figure is still too small, making the multiple not meaningful.

The following chart zooms in on the current market positions based on projected 2025 figures. SAVE is trading at the upper and "expensive" end of the EV/EBITDA and EV/Sales ranges compared to its peers, with multiples of 5.7x and 1.1x, respectively. This positioning can be linked to the company's leverage, leading to an elevated enterprise value, and an artificially elevated market value.

The following chart juxtaposes Spirit's price-to-book (P/B) and price-to-sales (P/S) multiples based on 2024 projections. Compared to its peers, Spirit is trading at a higher level, with its P/B ratio at 1.56x. In contrast, its P/S ratio is 0.29x, below the average for its peer group.

Verdict

Drawing on our analysis of multiple expansion and contraction and a comparative review against peers, we propose the following multiple ranges as the basis for setting a price target for the airline:

EV/Sales ‘25E: 1.15x-1.45x

EV/EBITDA ‘25E: 5.00x-6.25x

P/S ‘24E: 0.35x-0.40x

P/B ‘24E: 1.60x-1.90x

We can now apply each multiple range to today's share price and determine a fair price range for each metric. Ultimately, we suggest a share price target of $17.50, representing a potential upside of 14% from today's price.

Our share price projection does not end here. Read on under the 'Risk Assessment' section to see worst-case scenario projections.

Risk Assessment

In this section, we outline our main concerns about Spirit Airlines. For each of the areas, we present the specific risk (R), its impact (I), and mitigation strategies (MS).

• Customer Satisfaction and Operational Performance

  (R): Lowest ranking in customer satisfaction; high delay and cancellation rates.

  (I): Decline in passenger preference and brand reputation; impact on revenue.

  (MS): Improve customer service; enhance operational efficiency.

• Financial Performance and Demand Issues

  (R): Significant net losses due to softer demand and discounted fares.

  (I): Threat to financial stability; impact on long-term profitability.

  (MS): Diversify revenue streams; optimize fare structures.

• Cost Control and Reduced Capacity

  (R): Difficulty in managing costs; reduced capacity due to fewer plane deliveries.

  (I): Lower operational efficiency and revenue.

  (MS): Streamline operations; alternative fleet expansion strategies.

• Credit Rating Downgrade

  (R): Downgraded credit rating by Fitch Ratings.

  (I): Increased borrowing costs; hindered access to capital.

  (MS): Strengthen financial performance; improve debt management.

• Merger Uncertainties with JetBlue

  (R): Pending lawsuit against the merger with JetBlue.

  (I): Uncertainty in strategic direction and market positioning.

  (MS): Prepare contingency plans; maintain operational independence.

• Operational Disruptions

  (R): Adverse weather, worker shortages, technical glitches.

  (I): Decreased reliability; customer dissatisfaction.

  (MS): Enhance workforce management; upgrade technical infrastructure.

Worst-Case: Share Price Projection

Our worst-case analysis indicates a potential 43% decrease in Spirit Airlines' share price to $8.8, based on conservative multiples from historical lows during challenging periods. This projection, detailed in the chart below, considers the risks identified earlier, including financial and operational challenges.

Trade Execution

This trade setup is not only intriguing from a risk/return perspective, it is also visually appealing. The expiration date is early next year, so feel free to throw it under the Christmas Tree. You are welcome.

Trade Entry - Dec 15, 2023

We are selling a skewed risk-defined straddle at strikes 15.00, with wings at 5.00 and 20.00, maturing on Feb 16, 2023. The break-even point is at 8.25.

The options chains are relatively liquid, but the bid and ask spread is wide, so we got filled slightly below mid-price.

Total: 6.75 Credit.

Option-Specific Trade Risks

Price: High to moderate risk of the underlying price rising to the agreed level or falling near/below our break-even point, especially if the merger outcome is confirmed.

Volatility: Moderate to low risk of implied volatility increasing beyond current high levels but a high risk of it remaining elevated.

Assignment: Low risk for short call assignment. It may become moderate if the price rises without a quick merger resolution, though manageable with some extra transaction costs.

Expected Value

The expected value (EV) indicates the expected profit (or loss) if you make the same trade indefinitely.

Expected Value = (Probability of Profit * Expected Profit) - (Probablity of Loss * Expected Loss)

We aim to create an edge by integrating macro, micro, and technical analysis, identifying mispriced options contracts, and applying effective trade management to tip the odds in our favor.

Expected Value for Short Straddle (Risk-Defined)

Within our set timeframe, we have identified three primary scenarios, along with their respective probabilities:

1. No Merger Decision: The share price stays close to our maximum profit - 33% probability.

2. Merger Approval: The share price rises above 20 - 33% probability.

3. Merger Blockage or Cancellation: The share price drops to between 6 and 10 - 33% probability.

As illustrated in the table below, when these outcomes and probabilities are applied to our trade payoff, the expected value on equity results in an impressive 60%. This figure represents an exceptional theoretical return.

Closing Chapter

You should expect updates on most articles within 4-6 weeks. We use the exact headline ending with (+/- xy%) and mark the cover cartoon with a red CLOζED stamp. This way, the performance is easy to track.

We only send updates via email if you specifically ask for them here. We want to keep the flow of information short and sweet. However, you can still access a free preview of all updates on MacroDozer as soon as they are released.

My name is Juri von Randow. You can find me on the top banner to the right, MacroDozing like there's no tomorrow. (Email version only.)

Feel free to pass me on. Warm regards.

All articles are purely educational; they are not tailored to any particular individual or portfolio and do not constitute investment advice. Let us know if you are interested in implementing any of our ideas. We can help or point you in the right direction.

• Adopted a long wide strangle strategy, rolling the call down and out in time while maintaining original risk levels.

• Escaped with a -22% return, highlighting the unpredictable nature of short to mid-term directional plays.

Recap Situation

StoneCo rebounded from a steep price drop, achieving significant revenue, volume, and customer growth. We adopted a long, wide strangle strategy, leveraging the low premium for balanced risk-reward.

However, an overly ambitious maturity date led to a fast decline in our option premium. We responded by extending the call to January 2024 and dropping the put hedge, converting the position to a straight long call while preserving the initial risk level.

See the updated article below for further details.

Why Now

Navigating this ride underscores the risks of short to mid-term directional plays. Despite probabilities and careful analysis, outcomes can be unpredictable, and we take a small hit on our “lottery ticket”.

We've all had our Bob Iger moments, humbled by the free market's unpredictable 'go fugg yourself' moment. Learning from this, we've exited the trade and plan to focus on spreads or LEAPS for any future directional plays. These are more forgiving if the price moves in the wrong direction and are somewhat more repairable.

One could technically bet on a further share price rise to break even, but we've had enough. Should the price take a breather and retrace, we would not have enough time to see through the next leg higher; we only have 46 days left on the contract.

Trade Execution

Trade Entry - June 5, 2023

The options chains were relatively liquid that day, considering it’s an emerging market play; our average fill was 0.71.

Total: 0.71 Debit.

Trade Update - Aug 1, 2023

We closed our short strangle. We got filled at the lower end of the bid / ask spread.

Total: 0.60 Credit.

We rolled into a long call 15 with a January 2023 expiration. We got filled at the upper end of the bid-ask spread.

Total: 2.30 Debit.

We have kept our risk constant without increasing our position. The cost for the call, set at $2.30 for each new contract, will not exceed our original risk level of $0.71 per initial contract. In other words, as we only gained $0.60 from the trade roll, the carried-over risk into the roll will be limited to $0.60 times the number of original contracts.

Trade Close - Dec 4, 2023

We are closing our long call. Due to high demand, spreads are tight, and options are liquid.

Total: 2.12 Credit.

Trade Return

The absolute return on this trade is

-0.71 [debit trade entry & overall risk] + 0.60 [credit trade roll] = -0.11

-2.30 [debit trade roll] + 2.12 [credit trade exit] = -0.18

→ -0.11 - 0.18 * (0.60/2.30) = -0.157

The overall risk taken was 0.71, which leads to a return on equity of

-0.157 / 0.71 = -22.1%

All MacroDozer articles are purely educational; they are not tailored to any particular individual or portfolio and do not constitute investment advice. Let us know if you are interested in implementing any of our ideas. Perhaps we can help or point you in the right direction.

• n=1 makes for a good anecdote.

• When Large Language Models don’t replace the COVID narrative.

• We tried the burger and keep it neutral.

1. Driving Forces

Anecdotal evidence makes for entertaining stories. So, why bother with the n=1 problem? The appeal lies in simplicity: we can dispense with the concept of controlled trials, there's no need for expensive participants or equipment, and here is the kicker, no laboratory environment can affect the outcome.

Let me illustrate: Last summer, I was offered a Beyond Meat burger. The taste wasn't too bad, but half an hour later, I felt sick. Maybe my Caucasian gut microbes had other challenges to overcome that night, but I didn't dare try this meat alternative again.

We believe it's time to recoup that investment, whether or not this is sufficient proof. And to be honest, we strive to profit beyond anecdotes and chemically-processed proteins, so we allow ourselves to focus solely on money flows and business fundamentals.

Beyond Meat (BYND), one of the market's most shorted stocks, with a 30-40% short interest, is a hotbed for short-squeeze specialists. These buy up out-of-the-money calls, forcing short sellers to cover and drive the price up. Additionally, it is an emotional asset with a passion-driven following that might be willing to invest beyond the usual boundaries of financial prudence for the causes of veganism or climate change.

We derive great pleasure from tracking emotional assets at the Doze, as they offer engaging content and intriguing risk returns. When the intensity or drama starts to wane and the popcorn is depleted, we anticipate a temporary period of stability or a return to the mean.

Let’s go.

2. Background Information

Since 2009, Beyond Meat (BYND) has sought to transform the meat industry with plant-based alternatives, contributing to the climate change debate and the global move towards sustainable, health-conscious food.

The company has made great strides since going public in 2019. Its products, designed to reflect the taste and texture of traditional meats, are available in many US American and international retail chains.

However, BYND's growth and profitability have been challenged by weak demand, high prices, waning consumer interest, saturated US distribution, and potential spoilage from high inventory. Financial issues like significant debt and cash flow difficulties worsen the situation, with the unsuccessful launch of Beyond Meat Jerky and potential distribution issues raising further concerns.

2.1 Valuation

A company in the packaged food and meat industry is deemed overvalued when its enterprise value is 5.1x its sales. This situation becomes particularly alarming when the company, besides making losses, is heavily indebted and undergoing a decline in sales. The industry's median multiple is just 1.8x, a significant 75% below BYND's valuation. Notably, more than half of these companies manage to generate profits.

EV/Sales Multiple Near Upper 52W Trading Range

BYND's enterprise value comprises its $1.1 billion market capitalization plus $1.2 billion in debt minus $260 million in cash. A 75% drop in enterprise value would result in a theoretical 'sub-zero' stock price. What a blessing - no public shareholder is personally liable.

The chart below illustrates that total assets are primarily driven by the senior convertible notes issued in 2021. However, the plot thickens in 2022 when total assets trailed behind these notes, thus plunging us into the thrilling realm of negative equity - how fun!

Total Assets Trailing Behind Convertible Senior Notes

Cash and cash equivalents are set to run out this year, and we're sceptical about how easy it'll be to secure more money through additional debt financing.

New funds to support the loss-making venture will most likely be generated through the recently established at-the-market issuance facility managed by Goldman Sachs. This provides another financially unremarkable asset for Goldman Sachs to promote; after all, they need to generate their commissions somehow. What better way could there be than by selling overpriced assets to the public under the pretext of combating global warming?

The prospectus (May 10, 2023) reveals an authorized issuance of $200 million in new shares for equity dilution, likely to exert additional downward pressure on the share price in the latter half of 2023. At the very least, it's improbable that short squeezes will catapult values to astronomical heights.

2.2 Growth

The idea that COVID is still being blamed for the company's problems in the Q1 2023 report raises eyebrows and leaves a sour taste. Large Language Models are the latest buzzwords, dah! So, if management is still clinging to the COVID narrative, it's time they shake it off, leverage ‘AI’, and shift the focus from whining to producing results.

The chart below indicates revenues are declining - hardly reassuring for a purported growth company. Moreover, we're incurring losses. While the projected figures for 2023 are not seasonally adjusted, they certainly assist in sensing the larger trend.

Revenues Decline - Losses Remain

To boost sales, it will be necessary to invest more heavily in research and development, enhancing existing products and devising new ones. This investment, coupled with the expense of comprehensive marketing and sales campaigns, will likely continue to exert pressure on profits.

2.3 Earnings Revisions & Profitability

Year-end earnings per share have been revised upwards ten times and downwards only once in the last three months. Sales, however, have been a mixed bag, revised upwards three times and downwards seven times. Nevertheless, this suggests a small potential for a positive earnings surprise.

The chart below indicates that the accumulated deficit continues to accrue and that equity is in negative territory – ouch!

Negative Equity - Accumulated Deficits

At this juncture, it may seem unkind to delve into a Rant Around concerning management's political tactics to preserve the planet, considering their current predicaments. However, a little philosophical diversion is, sometimes, exactly what we need to stay sane. Feel free to skip ahead.

Rant Around Tactics of a Planetary Conservationist

While pursuing planetary conservation and social justice is admirable, it can occasionally be obstructed by a blind adherence to overly simplistic ideologies, restricting independent and profound thinking. Sometimes, activism is more preoccupied with lamenting grievances rather than devising intelligent and practical solutions. There might even be an excessive tolerance for suboptimal solutions in the name of climate change to prevent mob outrage or cancellation demands.

Consider the case of plant-based processed foods renamed as ‘meat’ – a suboptimal solution that, while tolerated, may mislead and harm. This play on words can cause consumer confusion, further dissociate the term meat from its animal origin, potentially expose consumers to unexpected allergens, and engender a less transparent society. Picture being served a steak, only to discover it was composed of potatoes and legumes, coupled with the typical downsides of processed foods like emulsifiers, stabilizers, and sugars, which hardly contribute to a healthier lifestyle.

In its unprocessed form, meat is one of the most nutritious and least allergenic options available. There's no need to dabble with the definition. If a new name is required for plant-based alternatives, I'm confident that language models such as ChatGPT, Bard, or Perplexity could provide various suggestions if creativity falls short.

Bon appétit.

3. Trade Execution

Unfortunately, the share price has already experienced some mean reversion over the past couple of weeks, and it appears poised for another little rally into the next leg. Regardless, implied volatility remains high, and options premiums have not deflated due to the upcoming earnings event.

In a sense, this trade has now partially become an earnings play. Nonetheless, when the price rallies or falls beyond its standard deviation post-earnings, it often returns to its initial price. We will give it enough time and see what happens. May time and our favourite goddess, Theta, be on our side.

Dozer Fact: We're set to revive our chat feature to announce investment ideas more timely since the processing time for articles often exceeds the trade execution window.

We run, adjust, and verify all numbers ourselves. We delve deeply into financial reports and study them thoroughly. Public data services like Factset, Koyfin, or Ycharts often provide unadjusted or non-meaningful time series data; the real substance cannot be found there.

3.1 Trade Entry - Aug 2, 2023

We're selling a neutral risk-defined strangle at strikes 15.00 and 18.00, with wings at 10.00 and 23.00, maturing on Sep 15, 2023. Break-even points are at 12.50 and 20.50.

The options chains are relatively liquid; the bid and ask spread is wide, and we got filled slightly below mid-price.

Total: 2.64 Credit.

3.2 Trade Risks

Price: Earnings are released in less than a week. The probability of the price approaching one of our break-even points fast is moderate, but we believe in countermovements.

Volatility: The risk of implied volatility expanding beyond its current high level is moderate to low. Following the earnings release, we expect it to deflate.

Assignment: The assignment risk for the short call is low. It is out of the money at the time of the trade, and the borrowing cost for short selling has fallen from 130% to 50% in the last two months, meaning the counterparty should not have too much interest in exercising early.

4. Expected Value & Conviction

The expected value (EV) indicates the expected profit (or loss) if you make the same trade indefinitely.

Expected Value = (Probability of Profit * Expected Profit) - (Probablity of Loss * Expected Loss)

We aim for a positive EV after careful macro, micro and technical analysis, generating the edge through proactive trade management and market probability probing.

4.1 Expected Value For Risk-Defined Strangle

4.2 MacroDozer Conviction

Broker data at maturity shows a possible maximum profit of 264 and a maximum loss of -236. MacroDozer Conviction secures 50% of the maximum profit at early trade close, with a 63% chance of success, resulting in a positive expected value on equity of 17%.

• Beyond Meat is suffering from weak demand and financial difficulties.

• Despite losses and declining sales, it is valued at nearly 3x the industry median.

• To improve sales, BYND needs more investment in R&D and marketing.

• Loss-making operations will likely be financed by the issuance of new diluting shares ($200 million).

• A neutral risk-defined strangle is what we feel comfortable with.

5. Final Chapter

Expect updates on BrainDozers within 4-6 weeks. We use the exact headline ending with (+/- xy%) and mark the cover cartoon with a red CLOζED stamp. This way, the performance is easy to track.

We do not send BrainDozer updates via email unless you specifically ask for them here. We want to keep the flow of information short and sweet. However, you can still access a free preview of all updates on MacroDozer as soon as they are released.

My name is Juri von Randow. You can find me on the top banner to the right, MacroDozing like there's no tomorrow. (Email version only.)

Feel free to pass me on. Warm regards.

All BrainDozer articles are purely educational; they are not tailored to any particular individual or portfolio and do not constitute investment advice. Let us know if you are interested in implementing any of our ideas. Perhaps we can help or point you in the right direction.

• Rolling the trade and stretching the call.

• Moving into a lower and later dated strike reduces sensitivity to immediate pullbacks.

• Total capital at risk remains the same.

1. Recap Situation

We tried to tame the Brazilian jungle with a long wide strangle, but we soon realized that we had chosen a maturity date that required StoneCo to move faster than it wanted. We could have allowed more time to breathe. We experienced a gradual decline in the stock price that, at one point, ate up more than half of our option premium while our long put position provided minimal protection.

It's perfectly ok to experience temporary drawdowns; they remind us of our humanity and make us feel alive. Thanks to Curupira, a Brazilian forest god symbolizing resilience and perseverance, we've found the strength to overcome those drawdowns. We are optimistic about the future and remain confident that good times are still ahead for StoneCo.

von Randow, J. (2023, August 1).

Whatever, von Randow, cut the hippie crap and straighten those shoulders.

Moving on, we decided to update the trade and extend the call to January 2024. This time, we chose not to spend money on a put hedge, as it has only exacerbated the theta burn without providing significant downside protection. Even though it could make a difference should the price plummet abruptly, we firmly believe that StoneCo has already bottomed out.

Check out the original article below.

2. Why Now

We only have 80 days left on our contracts. The share price has returned to its break-even point, and the earnings hand grenade will be thrown into the mix in less than two weeks. From a risk management perspective, it's prudent to close the put side of the trade and roll the call to a lower and later-dated strike. This approach lessens the trade's sensitivity to immediate pullbacks. The increased options delta of the lower strike and extra time on the contract will effectively make this happen.

Here's a simple back-of-the-envelope calculation: If the share price pulls back to 13, our current 18-strike call option will lose 60% of its value. On the other hand, an option with a 15-strike would lose only 45% of its value under the same conditions. Furthermore, extending the contracts from October 2023 to January 2024 could reduce that immediate 45% loss to just 30%.

If the share price increases to 18 within the next month or two, we could still expect a return of 80-90%. The trade could also be closed outright if we neither believed in the business nor anticipated a breakout. Waiting for the next pullback is an option, but this would risk missing out on immediate further upside action.

3. Trade Execution

We are closing the long 8 put, rolling the 18 call down to 15, and moving it out from October to January, giving the trade three more months and reducing its sensitivity to the downside.

The previously wide, long strangle has become a simple 15-strike call with 170 days remaining on the clock. We want to ensure that our total risk - the cost of the call ($2.30) times the number of new contracts - isn't greater than our initial risk, which was the cost of the original contracts ($0.71) times their number, minus any potential loss incurred at the time of rolling.

3.1 Trade Entry - June 5, 2023

The options chains are relatively liquid, considering it’s an emerging market play; our average fill was 0.71, slightly above the mid-price level.

STNE: Payout Chart for a Long Strangle, Buy to Open.

Total: 0.71 Debit.

3.2 Trade Update - Aug 1, 2023

First Leg. STNE: Payout Chart for a Short Strangle, Sell to Close to Roll the Call.

We got filled at the lower end of the bid / ask spread.

Total: 0.60 Credit.

Second Leg. STNE: Payout Chart for a Long Call, Buying to Open.

We got filled at the upper end of the bid / ask spread.

Total: 2.30 Debit.

As mentioned earlier, we will not take on any additional risk. The cost of the call, set at $2.30 multiplied by the number of new contracts, should not exceed our original risk of $0.71 times the original contract quantity.

We only reclaimed $0.60 after the trade roll, so the risk taken over into the roll should not exceed $0.60 times the original contract quantity.

All BrainDozer articles are purely educational; they are not tailored to any particular individual or portfolio and do not constitute investment advice. Let us know if you are interested in implementing any of our ideas. Perhaps we can help or point you in the right direction.

• Neither fire alarms nor general lactation could make this trade work.

• The ringing has finally reached our own ears.

1. Recap Situation

We bragged and wanted to show how to catch the hottest cow. We didn't. AMC turned into a crazy cat, and we are out.

We had been firmly convinced that the Delaware court would approve the court hearing on the AMC/APE share class merger and the proposed settlement. Several favourable court and market indications have contributed to our above-average conviction.

The expected value of the trade was extraordinarily high at 104%, and the risk-return of 1:7 was worth all the chaos.

Check out the original BrainDozer article below.

2. Why Now

The immediate investment thesis surrounding the court decision on the settlement and merger of the two asset classes, AMC and APE, is now out the window. Instead of share price conversion, we got more share price divergence.

The Delaware court's rejection of the settlement has turned the case into a game of randomness and luck with no clear timeline. In such situations, stepping aside and seeking sensation elsewhere is best.

To summarize the ruling, Judge Morgan Zurn found that the settlement was unfair because it involved the waiver of specific claims to which the common shareholders (AMC) and plaintiffs, in this case, were not entitled. She also found that allocating more shares to the common shareholders (AMC) would harm the preferred shareholders (APE). Therefore, she decided that the settlement could not be approved in its current form.

AMC has been a pretty intense journey this year; we won't lie. But that's part of the game: we hold on to a thesis as long as we believe in it. If it doesn't come true within our time frame, we accept defeat and perhaps wait for it to pick up steam again later.

3. Trade Execution

The short calls, strike 3, were assigned 15 times. Sometimes only a fraction, sometimes the entire position; on average, roughly 50 per cent, 15 times.

In calculating the return on risk capital below, we conservatively assume a cost of 0.02 per assignment plus 0.01 borrowing cost for the assigned short-sold shares, which translates to an approximate average borrowing cost of 750%.

3.1 Trade Entry - Jun 30, 2023

The options chains are liquid, but the bid-ask spreads are wider than usual, so we were filled below the mid-price level.

Total: 1.76 Credit.

3.2 Trade Exit - Jul 31, 2023

We were filled at an average price of 1.50 at the upper end of the spread.

Total: 1.50 Debit.

3.3 Trade Return

The absolute return on this trade is

1.76 [credit trade entry] - (1.50 [debit trade exit] + 15 [assignments] * 50% [average assignment on position] * 0.03 [cost of reversals plus short sale borrowing])

→ 1.76 - (1.50 + 0.225) = 0.035

At trade entry, the risk at maturity was 0.24. We add the additional cost of each assignment reversal plus short sale borrowing, resulting in a total risk capital of 0.24 + 0.225 = 0.465, which leads to a return on equity of

0.035 / 0.465 = 7.5%

These are rough estimates; the trade did not perform as we expected, making it a neutral venture with significant opportunity costs in terms of mental bandwidth and other potentially missed opportunities. Nevertheless, we have once again gained new insights and learned valuable lessons.

All BrainDozer articles are purely educational; they are not tailored to any particular individual or portfolio and do not constitute investment advice. Let us know if you are interested in implementing any of our ideas. Perhaps we can help or point you in the right direction.

• We call her Amcyra, ready to lactate.

• When a fire alarm in the courtroom adds to the branding.

• Bankruptcy vs equity convergence: A race against insanity.

• Have a great weekend, and stay safe in your straddle.

1. Driving Forces

At the risk of repeating ourselves and being labelled as an unserious venture that favours meme plays over serious investments, picture the following scene:

On your favourite farm, amid a rustic charm, Amcyra, the beauty queen of cattle, stands out. With her vanilla and cocoa colours and her plump udders, she gets all the attention of retail tourists and is therefore known for the freshest and creamiest milk. The rest of the herd, neglected and fed on corn, can't compete.

Thirsty, you are faced with a choice: should you appease the resentful masses by milking a less attractive cow, or should you return to glorious Amcyra to be wowed as usual?

That’s what we thought. We keep milking that AMC cow and stick with the cream of the crop.

1.1 Delaware's Heated Court Hearing

Yesterday, the court hearing on the plan to convert AMC preferred stock (APE) into common stock (AMC) began with drama when a fire alarm abruptly interrupted the proceedings. So far, everything on brand.

The two-day hearing in Delaware aims to resolve shareholder objections to a settlement that would allow AMC to reverse stock split and issue new shares more effectively.

The hearing continues as we type with shareholder objections, followed by responses from defendants’ advocates. Deputy Chancellor and Judge Morgan Zurn will announce her decision in writing sometime after the adjournment. A recommendation from the court's special counsel indicates that a decision favouring the settlement is likely.

The timing of a written decision may vary, but we expect a conclusion within one or two weeks. We believe the court has had sufficient time to consider the evidence and legal arguments since the April 27, 2023, preliminary injunction hearing.

1.2 AMC: Converging with APE or Filing for Bankruptcy

AMC is also running out of time. The company needs to raise cash as quickly as possible by issuing new shares into the market, which is currently only possible to a limited extent by selling lower-priced and more illiquid APE shares.

2. Background Information

2.1 Recap Situation

• AMC was raising funds to finance loss-making operations by selling new common shares but hit the limit of authorized issuance.

• A shareholder vote to increase share issuance was blocked.

• To circumvent this, AMC issued a new class of preferred shares called APE as a split/dividend to common shareholders, which were not limited by authorized issuance.

• APE and AMC shares were supposed to trade at a similar price, but APE is trading significantly lower due to the ongoing issuance of new APE shares.

• The company plans to consolidate the share classes and increase the common share issuance to raise more funds at a higher share price.

2.2 Notes on Court Case

• AMC management has proposed a more than $100 million settlement in response to opposition from a pension fund and meme stock investors.

• The opposition claims the company revoked its promise not to convert preferred equity units (APEs) into common AMC stock.

• Management also issued a block of APE shares to hedge fund Antara Capital, prompting disagreement ahead of a critical investor vote about the APE/AMC conversion and the 1:10 reverse stock split.

• Although most common stockholders who voted on the APE conversion plan are in favour, many retail investors oppose it because of general dilution fears.

• The AMC attorney urges the court to approve the deal. Everyone will lose if AMC can't recapitalize by converting the APE units into common stock.

3. Trade Execution

We express our idea by selling a risk-defined straddle, where we also sell an in-the-money call at 3, which is very likely to be assigned. If your broker cannot assign individual in-the-money calls and closes the remaining straddle all at once, this setup is not useful, and a pure put version via the butterfly is more practical. However, the risk-reward profile of the butterfly is only 1:1 and has a much narrower profit zone, making it considerably less attractive.

The risk-defined straddle has a risk-return profile of 1:7. If we get assigned every day for the next two weeks and factor in a conservative cost per assignment of 0.02, we would still be significantly better off than a pure put-butterfly construct. If no court resolution emerges over the next couple of weeks, while AMC continues to squeeze higher, it would be prudent to cut losses and re-enter at a more opportune time.

We are selling a bearish risk-defined straddle at 3.00, with wings at 1.00 and 5.00, with Aug 18, 2023, maturity. Break-evens are at 1.25 and 4.75.

3.1 Trade Entry - Jun 30, 2023

The options chains are liquid, but the bid and ask spread is wider than usual, so we were filled slightly below the mid-price level.

Total: 1.76 Credit.

3.2 Trade Risks

Price: AMC and APE share prices will likely settle at around 3 following a potentially favourable court ruling, which does not mean that an upward price squeeze during or in anticipation of a ruling is impossible.

In addition, many option positions, especially butterfly constructs on the put side, long-only puts, or short calls, will want to be unwound. AMC short sellers will buy back their positions following a 25% decline, APE shareholders will sell following a 50% increase, and AMC management may want to begin dilution immediately to raise fresh money.

Plenty of forces acting on price.

Volatility: Implied volatility is again close to its 52-week highs, but we are talking meme, i.e. anything is possible, so the risk of a further increase in volatility is high.

Assignment: The assignment risk of the in-the-money 3 call is very high when the share price is trading at 4 or above. The short interest is 25%, and the borrowing cost for short selling ranges between 200% and 300%.

4. Expected Value & Conviction

The expected value (EV) indicates the expected profit (or loss) if you make the same trade indefinitely.

Expected Value = (Probability of Profit * Expected Profit) - (Probablity of Loss * Expected Loss)

We aim for a positive EV after careful macro, micro and technical analysis, generating the edge through proactive trade management and market probability probing.

4.1 Expected Value For Risk-Defined Straddle

The maximum profit is 175; we are talking approximations. The average profit at maturity is 90. The maximum loss is -25; we have increased this value to -40 for possible assignment costs.

For MacroDozer Conviction and Early Trade Close, we believe we can realize a smaller profit with a higher probability.

4.2 MacroDozer Conviction

The market assigns a 59% probability of profit at maturity and generates a positive EV on equity of 92%.

We believe the likelihood of realizing 70% of the expected average profit with proactive trade management and early trade closure is 77%, with a positive EV on equity of 104%.

• The court hearing over AMC's stock conversion plan is ongoing.

• Urgency for AMC to raise cash through new at-the-market shares issuance.

• Investors' opposition was countered by a proposed $100m settlement, which we expect to go through within the next two weeks.

• We sold a bearish, risk-defined straddle with a risk-reward of 1:7.

• Positive expected value of 104% with proactive trade management.

5. Final Chapter

Expect updates on BrainDozers within 4-6 weeks. We use the exact headline ending with (+/- xy%) and mark the cover cartoon with a red CLOζED stamp. This way, the performance is easy to track.

We do not send BrainDozer updates via email unless you specifically ask for them here. We want to keep the flow of information short and sweet. However, you can still access a free preview of all updates on MacroDozer as soon as they are released.

My name is Juri von Randow. You can find me on the top banner to the right, MacroDozing like there's no tomorrow. (Email version only.)

Feel free to pass me on. Warm regards.

All BrainDozer articles are purely educational; they are not tailored to any particular individual or portfolio and do not constitute investment advice. Let us know if you are interested in implementing any of our ideas. Perhaps we can help or point you in the right direction.

• Burning Bushes meet Zions Bancorp.

• Murky and illiquid +17% episode.

1. Recap Situation

We discovered how Sinai Bushes burn while diving deep into Zions Bancorporation's (ZION) books. We were amazed at the sheer prudence of their banking operations in the face of their market value crash and found that most listed regional banks have no real issues in the long run.

We also belittled Moody's and noisy investment jesters trying to act alpha.

Check out the original BrainDozer article below.

Our expected value on equity for a somewhat murky episode was +28%; we converted it to an actual return on equity of +17% in six weeks.

2. Why Now

Since we do not believe that ZION will face any further troubles even if the Fed were to hike a couple more times, we believe the bottom is in. A potential bounce off the most recent Fibonacci retracement is not unlikely in the near future.

Our options contracts expire in 23 days; hence, we are closing the trade.

3. Trade Execution

To close the short risk-defined straddle, we invert and go long the same thing.

3.1 Trade Entry - May 12, 2023

The options chains weren’t the most liquid, and the bid and ask spread was large. We were therefore filled slightly below the mid-price level at 5.80.

Total: 5.80 Credit.

3.2 Trade Exit - June 28, 2023

We were filled at an average price of 5.10, slightly above the mid-price level.

Total: 5.10 Debit.

3.3 Trade Return

The absolute return on this trade is

5.80 - 5.10 = 0.70

The equity at risk was 4.05, resulting in a return on equity of

0.70 / 4.05 = 17.3%

All BrainDozer articles are purely educational; they are not tailored to any particular individual or portfolio and do not constitute investment advice. Let us know if you are interested in implementing any of our ideas. Perhaps we can help or point you in the right direction.

• When all stars align, the fairy isn’t far.

• Taming the jungle with a long wide strangle.

• And before we forget: There are insults to science.

1. Driving Forces

Welcome to the world of low volatility. In times of inexpensive premiums, it is wise to avoid excessive selling while the demand for new strategies in a less dynamic environment grows. But fear not. When markets shift, we can effortlessly switch gears and capitalize on long premium opportunities without requiring Einstein’s wits.

Today, we embark on precisely that, with Brazil’s StoneCo Ltd taking the spotlight. So prepare yourself for an electrifying ride!

Rant Around Market PhDs

You may have wondered about our irregular publishing schedule. We only shoot out ideas when we are confident of conquest.1 Losing is a terrible choice. And when the trade works against us, we use all available tactics to reduce risk, extend time, and try to turn the tide.

A fair number of investors don't seem to care much about losing trades. "It diversifies the portfolio. That's what Harry Markowitz told us in 1952," and one feels timelessly cosy about it.

Not inspiring.

We steer clear of gambling traps and their tricky mind games while also side-eyeing those fancy economic analyses promoting emotional attachments and dubious evidence. They are easy targets to blame when most assumptions go belly up. Falling for intellectual satisfaction and a false sense of security before braving the storm?

Not inspiring.

No offence to academic pursuits, but don't expect the markets to pour milk and honey on your chest when you pull the professor. The market-obsessed individual displaying impeccable discipline and profound risk awareness, willing to take and manage it, will grab the market grant.

Less voodoo science and noise, more power transfer to the road.

Spiritus in Via.

2. Background Information

StoneCo Ltd. (STNE) operates in Brazil's fintech sector, providing small and medium enterprises with digital payment, financial services, and software.

STNE faced significant challenges but managed to execute a successful turnaround. The company experienced a decline in its stock price, losing over 90% of its value due to an overreached growth strategy involving the provision of unsecured credit.

The company made several changes to address these difficulties, including a new leadership team. They appointed a new CEO, Pedro Zinner, who was expected to fit better the requirements of a bigger and more diversified company. Additionally, a Chief Risk Officer position was created to reflect the company's efforts to reenter credit markets, and a new board member was appointed to drive technological innovation.

2.1 Valuation

The company's valuation may not appear cheap relative to its main competitor, PagSeguro. Still, the innovative business approach, future margin expansion and the introduction of new credit offerings justify a higher relative valuation.

The company has shown positive next twelve-month (NTM) earnings projections since day one following its IPO. Therefore, we have the luxury of presenting the NTM price-to-earnings ratio as a good value indicator relative to its history.

STNE: P/E Multiple (NTM)

With a forward P/E ratio of 17.4x, close to its all-time low, it is uncertain whether the stock will remain this attractive for much longer. So wait to find out, or grab the opportunity and put some skin in the game.

2.2 Growth

StoneCo's financial performance is impressive, with significant growth in key metrics such as revenue, total payment volume (TPV), and active customers. For example, total revenue doubled in 2022 and saw a 31% year-over-year increase in the first quarter of 2023. In addition, adjusted net income2 increased nearly six-fold year-over-year.

Total Revenue & Adjusted Net Income (in R$bn / R$mn)

The company has a competitive advantage in the market by disrupting the traditional payment industry in Brazil. StoneCo offers superior customer experience, lower fees, faster settlement, and more transparency than conventional banks. In addition, it leverages proprietary technology and data analytics to provide tailored solutions to its clients.

Active Clients & Total Payment Volume (TPV)

Growth is also driven by expanding the distribution network, diversifying the product portfolio beyond payment processing, and taking advantage of Brazil's digitalization and financial inclusion trends. In addition, the company keeps competition at bay by focusing on innovation, customer service, marketing, and acquisitions.

A changing regulatory environment and an improving macroeconomic outlook in Brazil could provide a tailwind. The company is well-positioned to serve the growing Brazilian e-commerce industry as small and medium enterprises expand into online channels.

2.3 Earnings Revisions & Profitability

StoneCo recalibrated its business strategy, aiming to balance growth with profitability. In addition, the company acknowledged past mistakes of growing beyond its means and focused on improving its bottom line. Despite these setbacks, StoneCo and its main competitor, PagSeguro, were the only two companies able to increase their market share during the past two years.

Earnings per share estimates for the upcoming quarter were revised upward by a net of six times, while sales estimates were revised upward by a net of two times.

3. Trade Execution

Promising an electrifying ride, we finally present a long premium strategy with a long out-of-the-money strangle, mainly betting on an upside move over the next 30-60 days. Should the price fall below the 200-day moving average or even retest the April lows, we would book a small profit or loss depending on how fast and deep the fall, and reposition or close the trade entirely.

Our biggest enemy is a prolonged non-volatile sideways move that would slowly burn the option premium/theta we own. Remember, we are long premium now, and theta burn will work against us this time.

We buy a bullish tilted strangle by going long the out-of-the-money call at 18.00 and the out-of-the-money put at 8.00, maturing on Oct 20, 2023, giving us enough time for a move and minimizing daily theta decay. The key is to close or roll the trade early to avoid a maximum loss.

3.1 Trade Entry - June 5, 2023

The options chains are fairly liquid; our average fill was 0.71, slightly above the mid-price.

Total: 0.71 Debit.

3.2 Trade Risks

Price: The risk of a prolonged sideways movement with low volatility is medium.

Volatility: Implied volatility is relatively low, and the risk of a further decline is minimal.

Assignment: No assignment risks, as we are long premium.

4. Expected Value & Conviction

Let’s master our maths. The expected value (EV) indicates the expected profit (or loss) if you make the same trade indefinitely.

Expected Value = (Probability of Profit * Expected Profit) - (Probablity of Loss * Expected Loss)

We want a positive EV after careful macro, micro and technical analysis, considering proactive trade management and early trade closure. We generate the edge by challenging the market probabilities and proactively managing the position.

4.1 MacroDozer Conviction

The market assigns a 20% probability of expected maximum profit at maturity and generates a negative EV on equity of -9%.

We believe the likelihood of realizing 70% of the expected maximum profit with proactive trade management and early trade closure is 35%, with a positive EV on equity of 42%.

• StoneCo Ltd. is a Brazilian fintech company that underwent a successful turnaround.

• Impressive growth in revenue, total payment volume, and active customers.

• Valuation may not be cheap compared to competitors but justified by innovative business approach and future expansion.

• Implementing a long premium strategy with a long out-of-the-money strangle, betting on an upside move with downside hedged.

• Minimal risks of prolonged sideways movement, declining volatility, or assignment.

5. Final Chapter

Expect updates on BrainDozers within 4-6 weeks. We use the exact headline ending with (+/- xy%) and mark the cover cartoon with a red CLOζED stamp. This way, the performance is easy to track.

We do not send BrainDozer updates via email unless you specifically ask for them here. We want to keep the flow of information short and sweet. However, you can still access a free preview of all updates on MacroDozer as soon as they are released.

My name is Juri von Randow. You can find me on the top banner to the right, MacroDozing like there's no tomorrow. (Email version only.)

Feel free to pass me on. Warm regards.

All BrainDozer articles are purely educational; they are not tailored to any particular individual or portfolio and do not constitute investment advice. Let us know if you are interested in implementing any of our ideas. Perhaps we can help or point you in the right direction.

• Musical chairs and burning bushes.

• How stakeholder collaboration could triple the coffers.

• We poked fun at investment jesters and read a bedtime story to Moody's.

• See ”4.1 MacroDozer Conviction” for a real summary.

1. Driving Forces

Jerusalem is only 400 miles as the crow flies from where we currently run our engines. Holy land as far as the eye can see; Mount Sinai, burning bushes and Moses on the horizon, probably about to make yet another brew of that sacred acacia tree mixed with Syrian rue to keep everything on fire.1

ZION stands for Jerusalem, and the game of musical chairs, in German "Journey to Jerusalem", seems to be a good analogy for all kinds of meltdowns happening lately. So is Zions Bancorporation the next regional bank to freeze when the music stops playing again?

Unlikely.

At least not in the next two months, unless the bank's customers actively drive its demise or collectively default on their loans in a still-thriving U.S. economy. ZION's well-diversified and nationwide business customers don't seem as hysterical or troubled as the Tech Valley Unicorn set. They have real businesses and profitability to manage and no time for game theories on bank runs.

A more innovative approach would be for customers and management to join forces, commit to rationality, and invest in ZION shares. This strategy can double or triple everyone's capital within a year or two. The bank is in a stable and safe position even if stakeholders would start to panic over imaginary ghosts.

2. Background Information

Let's shed some light on these ghosts and address the market's top four concerns: 1. Liquidity, 2. Interest Rates, 3. Capital Management, and 4. Credit Risk. A thorough examination of financial reports has enabled us to identify all anomalies in the time series data. We will explain these anomalies and offer insights into probable outcomes until the end of the year as punchy as possible, so stay with us!!

2.1 Liquidity Risk

Management Claim:

We maintain ample liquidity with diverse funding sources. These include cash, interest-bearing funds at the Federal Reserve, and borrowings against loans and liquid investment securities, surpassing uninsured deposits.

For business customers, it is pretty standard that not all deposits are insured. However, in a worst-case scenario where all uninsured depositors withdraw their funds overnight, ZION had all the cash it needed without selling any securities.

2.1.1 Immediately Available Sources of Cash Vs. Uninsured Deposits

Below you will find more intriguing details about these cash sources. Read them and see how you feel if you learned something new.

Discount Window: The Federal Reserve's discount window is the basis for maintaining banking system liquidity, stability, and effective monetary policy implementation. Offering convenient funding, helps depository institutions manage liquidity risks efficiently, ensuring uninterrupted money flow to customers during market stress.

Bank Term Funding Program: Launched by the Fed on March 12, 2023, this program provides loans to banks with maturities of up to one year. U.S. government bonds, agency debt instruments, and mortgage-backed securities, all valued at par, are accepted as loan collateral.

Federal Home Loan Bank: This interbank lending system comprises eleven regional banks. They usually provide cash for housing, infrastructure, economic development and community needs. Although the system serves a public purpose, each bank in the network operates with private capital.

Repurchase Agreement: A repurchase agreement (repo) is a method of short-term borrowing used by government securities dealers. It involves selling securities, usually overnight, and buying them back the next day at a slightly higher price equal to the overnight rate. "Repo" for the selling party, "reverse repo" for the buying party.

Let's take a closer look at the deposit story.

The sharp increase in large uninsured deposits during the pandemic, when the Fed and the government flooded the economy and the public with liquidity, was an anomaly and is expected to decline to pre-pandemic levels as the Fed tightens and the public becomes cash-poorer again.

Is a drop in uninsured deposits from 49 billion to 31 billion between 2021 and 2023 drastic? Yes, it is. As is an increase from 28 billion to 49 billion in previous years. On the other hand, insured deposits increased from 29 billion to 38 billion from 2019 to 2023 and have not looked back since.

2.1.2 Insured Vs. Uninsured Deposits

The cluster risk on these uninsured deposits is pretty low. They are distributed relatively evenly across all business customers, i.e. even if the 25 largest customers were to conspire against the bank and decide to withdraw their uninsured or unsecured deposits simultaneously; this would only account for three per cent of total deposits.

When people understand that no one will lose any deposits, whether they are insured or not, that part of the equation will quiet down. And yes, during the Great Depression (1929-1939), when 9,000 U.S. banks collapsed with no deposit insurance scheme, plenty of depositors walked away empty-handed. However, during the Savings and Loan Crisis (1986-1995), when more than 1,000 U.S. banks failed, no depositors lost their money, nor did any during the Great Financial Crisis of 2008.

Moreover, we believe it is only a matter of time before Congress and the Federal Deposit Insurance Corporation (FDIC) raise the standard deposit insurance limit from 250,000 to possibly one or two million, which would be an easy psychological fix at negligible cost. This change would benefit business customers and calm down noisy investment jesters like B. Ackmann, who possess limited resources and a restricted grasp of the complexities of the financial system. We must admit, though, "Bank Term Funding Program" doesn’t sound sexy and isn’t going to make the next big tweet in town.

The following charts show additional figures from the balance sheet and the cash flow statement that reflect anomalies related to liquidity risk. All figures are in millions.

Non-interest-bearing deposits are naturally declining in today's high-interest rate environment, while interest-bearing deposits increased by an equivalent amount in Q1 2023. The sum of the two is still well above pre-pandemic levels.

In the cash flow statement, it is easy to see how cash inflows from borrowings and money market divestments offset deposit outflows. Our baseline scenario assumes a gradual slowdown in deposit outflows, most likely ending slightly above pre-pandemic levels.

2.2 Interest Rate Risk

Management Claim:

We control interest rate risks by actively managing net interest income and associated equity value volatilities. Our investment securities portfolio, with a duration of 4.1 years, helps us balance the duration mismatch between loans and deposits.

Typically, the bank does better in a high-interest-rate environment. Still, the pace of change has been rapid and poorly communicated, with mixed messages from Fed Chairman Powell and his presidents.

Interest income improved in the first quarter and reached a new high on an annualized basis, but interest expense due to higher costs for deposits and short-term loans keeps net interest income in check.

It is unclear what management means by "actively managing the volatility of net interest income and associated equity securities". However, they employ extensive hedging strategies using derivatives to mitigate additional investment risks.

In addition, the accounting manoeuvre for fiscal 2022 was remarkable. By writing down the entire loss from the "available-for-sale" investment securities to fair value through the statement of comprehensive income, it was excluded from the actual income statement and year-end bottom line. Although these unrealized losses on investment securities are deducted from the shareholders' equity on the balance sheet, they have no impact on the Basel III capital ratios.

Now comes the most elegant part: the strategic move to transfer half of the securities from the available-for-sale category to the held-to-maturity category allows the more steady cost amortization (/accretion) method to be applied to the held-to-maturity portion. As a result, the deep-discounted fair value of these securities, now kept in the held-to-maturity category, will be gradually accreted to their full value until maturity. This accretion will be recognized through interest income in the income statement. It will continuously boost ZION's earnings figures and bottom line over the next few years.

Elegant.

We do not anticipate any further substantial write-downs for investment losses, whether or not they impact the bottom line. The investment portfolio consists primarily of U.S. government-issued securities and no crazy crypto or Cathy Woods ARK plays. As long as there is no unexpected and aggressive continuation of Fed rate hikes beyond the five per cent level - which is highly unlikely, and treasuries futures markets expect the opposite - ZION should be in a reasonably strong position financially for years to come.

2.3 Capital Management

Management Claim:

We maintain robust regulatory capital ratios, with an improved Tier 1 ratio of 9.9%, surpassing requirements for well-capitalized banks. Our strong earnings capacity supports future capital expansion. Stress testing is regularly employed to inform capital and funding decisions.

The regulatory capital ratios look good because the comprehensive loss from the investment securities measured at fair value has no impact on these ratios. While this may seem problematic, we do not consider it a problem. As the fair value of these securities returns to par as they mature, retained earnings will increase due to this steady capital accretion flowing through interest income, while the current negative accumulated other comprehensive income on the balance sheet will move back to zero over time.

The development of retained earnings looks healthy, the bank has been sustainably profitable, and the common equity has declined due to ongoing share buyback programs.

2.4 Credit Risk

Management Claim:

Our strong credit discipline, robust underwriting standards, and diversified loan portfolio have ensured excellent credit quality for over a decade. Notably, we have actively managed credit risk in our commercial real estate loan portfolio, reducing it to 23% of total loans from 33% in late 2008.

The loan book: we struggled to find anything wrong. It looks healthy, distributed across and within industries and states, dull, and has no signs of increased loan defaults - Conservative banking.

The commercial real estate business is similarly well diversified and has been reduced by over thirty per cent since the Great Financial Crisis in 2008.

Rant Around Credit Rating Agencies

At this point, it seems reasonable to berate Moody's.

There seems to be no clear reason for ZION's credit downgrade. Yes, they are part of an industry. That's it? Impressive.

It is common knowledge that rating agencies are not averse to covering their backsides, especially after the Great Financial Crisis, for which they were partly responsible. Lack of backbone and understanding of micro and macro dynamics are not conducive to the quality of any rating.

If only these bookkeepers believed in themselves and in their ability to recognize creation and destruction at an early stage. They would call themselves economists, only to discover that a change in job title does not cure perpetual slippage.

Good night.

3. Trade Execution

We are selling a neutral risk-defined straddle at 22.50, with wings at 12.50 and 32.50, with Jul 21, 2023, maturity. Break-evens are at 16 and 29.

3.1 Trade Entry - May 12, 2023

The options chains are not the most liquid, and the bid and ask spreads are wide. We were therefore filled a little below mid-price at 5.80.

Total: 5.80 Credit.

3.2 Trade Risks

Price: The break-evens for this trade are wide, but there is always the risk of an upside squeeze or another sharp price decline, depending on how this regional banking crisis plays out. We estimate this probability to be moderate within our time frame.

Volatility: Implied volatility is already high. The risk of a further explosion is low.

Assignment: The assignment risk is moderate since the short sale borrowing costs (4.2%) and the short interest (9.8%) are not outrageously high.

4. Expected Value & Conviction

Let’s master our maths. The expected value (EV) indicates the expected profit (or loss) if you make the same trade indefinitely.

Expected Value = (Probability of Profit * Expected Profit) - (Probablity of Loss * Expected Loss)

When we analyze a situation, we want a positive EV after careful macro, micro and technical analysis, considering proactive trade management and early trade closure. In other words: We generate the edge by challenging the market probabilities and proactively managing the position.

4.1 MacroDozer Conviction

The market assigns a 32% probability of profit to our trade at maturity and generates a negative EV on equity of -18%. The options chains are downward biased and would generate an EVOE of around 0% for a straddle sold at 20, not at 22.50 where we enter.

We do not believe the price will fall further than 15 and assume a similarly high risk to the upside, so we take a straddle position at 22.50. If the price drops further in a hurry, there is the possibility of selling another risk-defined straddle at a lower price. It is always prudent to keep some gunpowder per trade for such occasions to extend the break-evens and widen the maximum profit zone.

We believe the likelihood of realizing the average expected profit with proactive trade management and early trade closure is 64%, with a positive EV on equity of 28%.

• The market seems to be overreacting to the current banking crisis. However, we believe most banks, including ZION, can deal professionally with the temporary mismatch of investments and customer deposits.

• The Bank Term Funding Program, which went into effect this year on March 12, 2023, keeps most banks liquid - among several other initiatives put in place since the Great Financial Crisis.

• ZION is a conservatively managed bank with steady and growing profitability that has used the pandemic investment challenges to its advantage.

• Should the crisis get out of hand, Congress and the Federal Deposit Insurance Corporation (FDIC) could come quickly to a psychological rescue by raising the deposit insurance limit from 250,000 to a more timely figure.

• We expect market volatility to continue for regional banks as an industry but believe a temporary equilibrium has been reached, hence our neutral position in ZION for a month or two.

5. Final Chapter

Expect updates on BrainDozers within 4-6 weeks. We use the exact headline ending with (+/- xy%) and mark the cover cartoon with a red CLOζED stamp. This way, the performance is easy to track.

We do not send BrainDozer updates via email unless you specifically ask for them here. We want to keep the flow of information short and sweet. However, you can still access a free preview of all updates on MacroDozer as soon as they are released.

My name is Juri von Randow. You can find me on the top banner to the right, MacroDozing like there's no tomorrow. (Email version only.)

Feel free to pass me on. Warm regards.

All BrainDozer articles are purely educational; they are not tailored to any particular individual or portfolio and do not constitute investment advice. Let us know if you are interested in implementing any of our ideas. Perhaps we can help or point you in the right direction.

Executive Summary

• Uber trends, and we are out.

• We close the trade, leaving the rest to the whizzes.

1. Recap Situation

We were recreating off the Red Sea shores while dreaming of black market dollars at a thirty percent premium and contra-indicators that might become real signals.

We also analyzed Uber and weren't sure if they had a tech or taxi theme going on in San Fran. Either way, today's results will give them a reason to revel.

Our expected value on equity for another episode of fun and frolic was 26%; we turned it into an actual return on equity of 59% in four weeks.

Check out the original BrainDozer article below.

2. Why Now

The probability of Uber bumping its head at 37 or 38 is relatively high. Moreover, we might only get another 20-30% out of our put-credit spread, a residual reward disproportionate to the risk of losing the return we have already made. Hence, we close the trade.

3. Trade Execution

To close the put credit spread we sold for a credit, we need to buy back a put debit spread for a debit, same strikes, same maturity.

3.1 Trade Entry - Apr 4, 2023

The options chains are very liquid, so we were filled mid-price.

Total: 2.71 Credit.

3.2 Trade Exit - May 2, 2023

We were filled at an average price of 1.37, right at mid-price.

Total: 1.37 Debit.

3.3 Trade Return

The absolute return on this trade is

2.71 - 1.37 = 1.34

The equity at risk was 2.29, resulting in a return on equity of

1.34 / 2.29 = 58.5%

All BrainDozer articles are purely educational; they are not tailored to any particular individual or portfolio and do not constitute investment advice. Let us know if you are interested in implementing any of our ideas. Perhaps we can help or point you in the right direction.

• The game stops right here for us.

• Upbeat earnings did mean downbeat price.

• Butterfly spirits at twenty bucks flew us closer to bliss.

1. Recap Situation

We showered the Fed, regional banks, and the entire financial regulatory system with sympathy for their inability to deal with the most complex financial instrument, cash.

We also expressed affection for Racket Ryan, Cohen the Barbarian, the Ruler of Retail, and his courage and investment genius. Is he behind the recent sharp sell-off that we bet on? Unthinkable.

Our expected value on equity for this episode of fun and enjoyment was 53%; we turned it into an actual return on equity of 97% in five weeks.

Check out the original BrainDozer article below.

2. Why Now

The option contracts mature in 18 days. We do not want to risk further short-term price squeezes or a continuation of the sharp price drop, as it becomes increasingly challenging to repair trades as contract maturity approaches. Perfect timing, perfect zone.

3. Trade Execution

For the first time, we bought a put-only butterfly instead of selling our usual risk-defined straddles or strangles, which include the put and the call side. This way, we eliminated assignment risk from potential in-the-money short calls.

The butterfly works the other way around: you buy the maximum risk at the edges in red for a debit and sell the green edges closer to maturity for a credit. See below the trade entry and trade exit payout graphs.

3.1 Trade Entry - Mar 24, 2023

GameStop has very liquid option chains. As a result, we were filled right in the middle between the bid and ask price, despite the relatively large spread.

Total: 1.45 Debit.

3.2 Trade Exit - May 1, 2023

We were filled at an average price of 2.85, slightly below the mid-price.

Total: 2.85 Credit.

3.3 Trade Return

The absolute return on this trade is

-1.45 + 2.85 = 1.40

The equity at risk was 1.45, resulting in a return on equity of

1.40 / 1.45 = 96.6%

All BrainDozer articles are purely educational; they are not tailored to any particular individual or portfolio and do not constitute investment advice. Let us know if you are interested in implementing any of our ideas. Perhaps we can help or point you in the right direction.

Executive Tease

• Counting dollars at Red Sea shores.

• Assets trend until they range.

• When diversity and inclusion make you contrarian.

• PS: See ”4.1 MacroDozer Conviction” for a real summary.

1. Driving Forces

Last night, I was trying to recreate somewhere off the Red Sea shores with one of my besties here in Egypt, and while I was elaborating on the latest war stories on markets & more, she was visibly excited at first. Then she interrupted and asked, “Juri, where are you doing all this business and investing?” I told her in the US, in dollars. She looked at me in shock, almost fear, and asked, “Isn't that super risky and dangerous to have your money in the US?”

When nothing seems regular, and everything appears upside down, when the anxiety levels of your finest analysts seem more elevated than the VIX, and you realize your contra indicators are becoming the real signal, it is time to take a deep breath and go back into tech.

We examined hundreds of our most liquid securities and categorized them as uptrend, downtrend, and ranging. Then, we compared facts and fundamentals, stories and drama; UBER emerged as one of the winners for a directional mid-term bull play over the next two and a half months.

2. Background Information

With its Mobility division, Uber is the market leader in ridesharing in the US and many other parts of the world. The company is back at all-time highs after the lockdowns and is steadily expanding its fleet, most recently with vans, coaches and party buses, and adding booking services for travel and lifestyle.

Active Drivers and Riders at All-Time-Highs

Meanwhile, Uber has developed two other high-growth businesses: its Delivery service (Uber Eats), estimated to have the second-largest market share in the US, and its Freight service with the recently acquired Transplace.

Delivery is tapping into all sorts of alternative categories, such as the delivery of spirits, groceries, and pharmaceuticals.

Freight is building various partnerships with Volvo, Google's Waymo and Aurora for autonomous driving solutions.

2.1 Valuation

Uber has an EV/sales multiple of 1.9x, with a high of 7.4x and a low of 1.3x. The three-year median is more than double the current value.

UBER: EV / Sales (NTM)

Sellers could dismiss the company as expensive when placing Uber in the passenger and ground transportation sector. However, considering Uber a tech company that facilitates communication and logistics between customers, drivers and businesses, buyers could praise the company as inexpensive.

You decide.

2.2 Growth

Annual sales growth from 2021 to 2022 was 83%. For 2023 and 2024, consensus estimates assume moderate growth of 16% and 18%, which we consider conservative.

Strategic growth through well-considered acquisitions will likely continue; we regard the management team as competent.

Uber recently acquired the Australian car-sharing company Car Next Door and is already active in this area in the UK with Hiya. Renting out your car to make extra money could be a game changer for some people and an excellent opportunity for Uber to tap into the enormous car rental market.

2.3 Earnings Revisions & Profitability

For the coming quarter, earnings per share estimates have already been raised twice, and sales estimates sixteen times.

Management appears to have costs under control and is on track for profitability in 2023, despite having a Chief Diversity and Inclusion Officer.1

Operating Losses and Margins ($ In Millions)

Rant Around Chief Diversity and Inclusion Officers

Get this. The old Uber slogan "Everyone's Private Driver" has been upgraded:

“We Reimagine The Way The World Moves For The Better”

We usually try to avoid calling things French, but what a poofy tagline for a cutting-edge technology company. Our wild guess, they've hired a little too inclusive and diverse, forgetting about actual competence in the marketing department, allowing such a brew to seep out to the public and shape the face of the brand. We almost took Uber off our watch lists because of this, but that's just a side note.

Entering this trade is as painful as the slogan; that's probably why it will work. We could be the contra indicator or eventually call ourselves a contrarian like every value investor out there; yet another jarring fact.

Sometimes it helps to trade uniformity for brilliance.

3. Trade Execution

This time, we want to trade directionally and have created a put credit spread. You can also opt for a call debit spread; both setups have similar payoff metrics. The put credit spread leads to slightly faster returns if the stock price moves in the desired direction early but also comes with minimal assignment risk.

Should the stock price move in the wrong direction, we can sell a call credit spread against our position and convert it into a risk-defined straddle to increase the expected value and reduce a potential loss.

We are selling a bullish put credit spread, short 35 put, long 30 put, with Jun 16, 2023 maturity.

Break-even is at 32.50.

3.1 Trade Entry - Apr 4, 2023

The options chains are very liquid, so we were filled mid-price.

Total: 2.71 Credit.

3.2 Trade Risks

Price: We do not expect a rapid price movement to the downside. We are trading above the 200-day moving average, and plenty of support is below. Our put credit spread is risk-defined.

Volatility: Both legs are on the put side, and we are long and short volatility. Hence, neither a contraction nor an expansion in volatility would have a significant impact. However, a contraction would be beneficial since we are short credit and, therefore, slightly more short volatility.

Assignment: Since we sell an in-the-money put right at the start, there will be some assignment risk. However, the contract does not mature for 73 days, and the borrowing cost (0.25%) and the short interest (2.25%) are low.

4. Expected Value & Conviction

Let’s master our maths. The expected value (EV) indicates the expected profit (or loss) if you make the same trade indefinitely.

Expected Value = (Probability of Profit * Expected Profit) - (Probablity of Loss * Expected Loss)

Options brokers in efficient markets and with liquid option chains usually generate an EV of roughly zero at expiration, regardless of the option type or combination. This may differ if call vs put demand is skewed and when probabilities favour one side or the other for some reason.

When we analyze a situation, we want a positive EV after careful macro, micro and technical analysis, considering proactive trade management and early trade closure. In other words: We generate the edge by challenging the market probabilities and proactively managing the position.

4.1 MacroDozer Conviction

The market assigns a higher loss probability to this trade and generates a negative EV on equity of -10%2. We believe the likelihood of realizing half the expected profit with proactive trade management and early trade closure is 70%, with a positive EV on equity of 26%.

• Uber is crisis-proven and used the lockdowns to increase efficiency and develop other high-growth businesses.

• Earnings have been positively revised recently, and the company is on track for profitability in 2023.

• Share price momentum looks positive and is trending upwards with serious support at 29.

5. Final Chapter

Expect updates on BrainDozers within 4-6 weeks. We use the exact headline ending with (+/- xy%) and mark the cover cartoon with a red CLOζED stamp. This way, the performance is easy to track.

We do not send BrainDozer updates via email unless you specifically ask for them here. We want to keep the flow of information short and sweet. However, you can still access a free preview of all updates on MacroDozer as soon as they are released.

My name is Juri von Randow. You can find me on the top banner to the right, MacroDozing like there's no tomorrow. (Email version only.)

Feel free to pass me on. Warm regards.

All BrainDozer articles are purely educational; they are not tailored to any particular individual or portfolio and do not constitute investment advice. Let us know if you are interested in implementing any of our ideas. Perhaps we can help or point you in the right direction.

• When you go to a funfair, and your cash isn't mature.

• Upbeat earnings could mean downbeat price.

• We choose butterfly spirits at twenty bucks and see where we can fly.

• PS: See ”4.1 MacroDozer Conviction” for a real summary.

Bed Bath Beyond, FTX, GameStop. First, Signature, Silicon... and NFT stands for No F*cks Taken. It's not my fault that "good cop, bad cop" isn't working for you, but I'm telling you, I wasn't stealing from the people! They must have mistaken me for some God since I never anticipated monetary offerings of this magnitude. Besides, Elon, Peter, Kevin; they’ve been doing this for decades now, and it seems to be working just fine for them!

1. Driving Forces

While all sorts of U.S. government institutions are busy trying to bring order to the endless chaos of meme mania and crypto craze, and a new generation of Federal Reserve chairs and bank managers are unable to properly set maturities for the world's simplest investment instruments (cash), we'd love to dive deeper into this funfair.

There is no shortage of elevated implied volatilities and inefficiencies, and we feel obliged to sell pricey premium to keep these markets liquid and perhaps make them just a little more efficient.

We prayed hard that Racket Ryan would give us another chance to finally get into his primary vehicle of abuse, Gamestop (GME), and bet against his last bloated horse in his shallow circus. We managed to do a little warm-up sparring in his former BBBY arena. He quickly abandoned the sinking ship as it shot out of the water one last time before finally sinking to the bottom of the ocean along with his now financially drowned retail mob.

Even though the relative implied volatility of GME, i.e. current implied vs historical implied, is not peaking, the absolute implied volatility is still at 100%. By comparison, the S&P 500 and NASDAQ are currently at 24% and 28%, respectively. Good enough for us to sell premium south of the current share price around the 50-day mean and bet on a further decline in volatility and a normalization of the share price after the earnings jump.

Rant Around Faith

Racket Ryan, Cohen the Barbarian, the Ruler of Retail, the Holy Boy who handed over his losing BBBY bag to his mesmerized disciples, is still part of GameStop. Blame him? Blame his followers?

Faith must somehow be lived out as an existential need of human existence. Religions with their outdated dogmatic rituals are increasingly rejected. So why not worship partners, favourite sports teams, digital tokens, or immature leaders who are noisy enough to be considered alpha and wise?

I emphasize the spiritual aspect of it because once you understand that you are dealing with religious movements and no rational investment environment, your trading strategies and results will improve. Do you want to ride or challenge a religion? Maybe. Just make sure you understand the rules and rituals before you get involved.

We believe in volatility, the almighty movements. The holy ghosts of memes, the losing bags of our fathers, lords, and the spirits of the markets.

Ryan. Chapter 1: Verse 1-3; SEC Form 3-4 + 8-K Current Report [2023-03-21].

2. Background Information

To briefly answer the question posed in the article's headline: The games aren't stopping anytime soon. Unless an activist investor jumps ship again, dragging most retail investors along and leaving a share price reflecting a market capitalization of maybe 0.30x sales with no ability to further fund annual losses by selling overpriced new shares.

GameStop is a rapidly shrinking, loss-making retail chain that sells new and used gaming the old-fashioned way. It's a wonder it still exists. Small investors have allowed GameStop to sell billions of dollars worth of new shares into several short-squeeze rallies and pay off its entire debt.

However, the company has not found a way to reinvent its business model, and we do not believe it will be able to do so. Cost cutting will only get you so far, but when revenues are shrinking, and annual cash burn is close to a billion, you must sit down and consider all the plans and alternatives when your playground is a dying industry.

Liquidation would most likely be the best solution, with all stakeholders receiving adequate compensation while there is still money and time to look for new and perhaps more contemporary projects.

2.1 Financials

A quick look at the Q4 non-GAAP numbers shows we had a legitimate positive earnings quarter, with no apparent creative GAAP/non-GAAP accounting stunt. GME reduced the cost of goods sold and admin expenses and, as a result, reported upbeat Q4 earnings of 16 cents per share.

However, nominal revenues continue to decline in a high-inflation environment, and the main reason for the lower cost of goods sold seems to be a one-off disposal of inventory. The entire fiscal year shows yet another significant loss for the company.

There is no debt and more than a billion dollars in cash on the balance sheet; maybe management can use that to get business pal Sam B.-Fried out of his parent's house and devise a novel idea.

Ah, wait, sorry, they already tried collaborating with Sam before he was arrested. So let’s burn it all over the next 12-18 months.

2.2 Valuation

The current EV/sales multiple stands at 1.0x. The industry standard for a loss-making computer and electronics retailer is 0.25x. GME could easily trade at $5.00 instead of $22.00, ignoring other risks.

3. Trade Execution

When setting up yet another meme trade, this is where the ζeta (alpha) seems to be for us these days, we need to ensure we are adequately hedged against price squeezes, implied volatility explosions, and assignment risks.

By their very nature, option chain call and put sides can respond differently to unusual events such as short squeezes. Therefore, we opt for a put-only setup this time (Butterfly), dampening the overall price swings and eliminating assignment risks of any in-the-money short calls.

As we enter the trade early, we start with 25% of the standard trade size, which can be increased to 100% in the next few trading days if feasible.

We are buying a slightly bearish Butterfly, two short 20 puts, one long 15 put and one long 25 put, with May 19, 2023 maturity.

Break-evens are at 23.50 and 16.50.

3.1 Trade Entry - Mar 24, 2023

GameStop has very liquid option chains. As a result, we were filled precisely in the middle between bid and ask.

Total: 1.45 Debit.

3.2 Trade Risks

Price: Short-squeeze risk: 40%. Merger or acquisition risk: 5%. Bankruptcy/ liquidation risk: 1%. Maximum loss at maturity: Defined.

Volatility: A potential short-squeeze would come with an implied volatility explosion. A put-only Butterfly setup will protect against that reasonably well, and the maximum loss at maturity is defined.

Assignment: The short puts can only be assigned if the share price falls sharply below the 20 strike. We would then exit the trade. Risk: Minimal.

4. Expected Value & Conviction

One of the secrets of successful trading is to master your maths. An important principle is the expected value (EV), which indicates the expected profit or loss if you make the same trade indefinitely.

Expected Value = (Probability of Profit * Expected Profit) - (Probablity of Loss * Expected Loss)

Broker Data with efficient markets should show an EV of 01. In comparison, MacroDozer Conviction gives us an EV of 78 and an equity EV of 53% on early trade close.

4.1 MacroDozer Conviction

The market assigns a probability of 0%2 for an average expected profit at maturity of 266; we believe that the probability of achieving half of the maximum profit of 355 (= 178) is 60% with proactive trade management and early trade closure.

• The share price will likely revert to the mean after one-off positive quarterly results due to inventory disposal.

• Market capitalization inflated by at least 400%.

• Turnaround of the company is improbable, high cash burn, dying industry.

• A further short squeeze is unlikely, as short interest is relatively low at 22% free float, and borrowing costs are only 15%.

• Potential price pressure from activist investor Ryan Cohen, known for his quick exits.

5. Final Chapter

Expect updates on BrainDozers within 4-6 weeks. We use the exact heading, ending with (+/- xy%), and label the cover cartoon with a red CLOζED stamp. That way, the performance will be easy to follow.

We are not sending BrainDozer updates via email unless you specifically ask for them here. We want to keep the information flow light and to the point. You can still freely access all updates on MacroDozer the moment they are released.

My name is Juri von Randow. You can find me on the top banner to the right. MacroDozing, as if there was no tomorrow. (Email version only.)

Feel free to share. Sincerely.

All BrainDoζer articles are educational only; they are not tailored to any person or portfolio and do not constitute investment advice. Let us know if you are interested in implementing any of our ideas. We might be able to help or point you in the right direction.

• Never before have we had to fight so hard to reach the finish line.

• Option assignments, short sellers, and inflated position sizing made for a remarkable three-way performance.

• With the beast overpowered, more time will go back into new trading ideas and the set-up of an easy-to-follow MacroDozer Investor portfolio.

1. Recap Situation

If you think you've peaked and are toying with the idea of dividing returns by zero risk on your way to infinity, keep in mind that there could be explosives hiding around every corner that will keep you busy until maturity in case the monkeys do not.

The past eight weeks have been a flurry of internal activity at the Doze. Fighting assignments and short sale fees beyond the 700 per cent mark, restructuring and reducing oversized positions resulting from squeezy options assignment reversals, and watching kamikaze reddits slaughter overconfident semi-pros.

AMC Shares - Cost of Borrowing for Short Selling

Retail weapon of choice: Cheap out-of-the-money calls. Semi-pros’ AMC/APE conversion trade: Death by multiple squeezes (AMC) & dilution through management and privileged insider investor (APE).

What a masterpiece of illusion, with the entire investor base giving their last blood so that a handful of AMC aristocrats can get fed and fat. Here we are, trying to be funny. If any severe investors are left among the AMC/APE speculator crowd, I suggest putting down the OxyContin, and start selling!

Thank goodness our options product was risk-free.... not. Check out the update to the original BrainDozer below.

MacroDoζer

AMC: Risk-Free Trading (UPDATE)

Executive Summary When you monkey around with trade size. Four is close to risk-free; three is not! The infinity trade is coming back to earth. 1. Recap Situation You may have noticed little activity at the Doze lately. The reason is simple: we have been busy investigating and dealing with arguably one of the most extreme events in American-style options trading. The experience taught us a lot and was humbling, to say the least, mainly because we had structured our products to be risk-free at maturity and sized them accordingly, namely a bit larger than usual. The last few weeks wouldn’t have been so intense if we had been more prudent. However, the lessons learned from the first real drawdown under pressure are invaluable. We have developed new products, forged new strategies to contain future explosions of implied volatility and option assignment risks, and generated new, improved hedging principles against transient and sudden directional changes in price from trade start to trade ex…

Read more

4 years ago · 1 like · Juri von Randow

2. Why Now?

In the end, our trigger of last resort kicked in. The plan from the beginning was to bet on a falling AMC share price, and the ultimate catalyst, we suspected, shall be the vote on the AMC/APE share merger three days before maturity. This has now materialized, and we are happy to close the trade just before expiration.

The emperor is not wearing any clothes; who would have thought…?

Full disclosure, we at the Doze had to de-risk parts of our positions a little earlier. We monkeyed around with trade size and made additional trades by selling straddles below strike four, a volatile yet valuable lesson. That said, with some MacDoze trade repair sorcery and on-risking a couple of weeks and days before the vote, we could squeeze out an honourable return on nearly all accounts; a tremendous win. We also learned some priceless moves right off the streets for future insanity plays.

3. Trade Execution

The short calls, strike four, were assigned seventeen times. Sometimes only a fraction, sometimes the entire position; on average, roughly fifty per cent, seventeen times.

When the stock price went up, we usually had to take a cut; when it went down, we gained a little on reversal. We are taking the prudent approach of including a cost of two cents per assignment reversal for the return on risk capital calculation below.

3.1 Trade Entry - Jan 19, 2023

Total: 2.03 Credit.

3.2 Trade Exit - Mar 16, 2023

Total: 0.32 Debit.

3.3 Trade Return

The absolute return on this trade is

2.03 [credit trade entry] - (0.32 [debit trade exit] + 17 [assignments] * 50% [average assignment on position] * 0.02 [prudent cost of reversals])

→ 2.03 - (0.32 + 0.17) = 1.54

At trade entry, the risk at maturity was 0. However, due to squeezes in price, implied volatility and short sale borrowing rate, the total premium temporarily rose to 2.25, resulting in a momentary theoretical risk of 0.22.

We add the additional cost of each assignment reversal, resulting in a total risk capital of 0.22 + 0.17 = 0.39, which leads to a return on equity of

1.54 / 0.39 = 395%

Well done on all the lunacy, provided you stuck to the MacroDozer trade sizing without preventive de-risking and kept a decent amount of patience.

3.4 Trade Size

If you want to risk, e.g. 5% of your equity per trade, but your broker quotes zero risk, consider a potential further expansion/ explosion of implied volatility and assignment costs as your risk base, if feasible.

A prudent trade size approach in this particular case, with an equity base of, e.g. $100,000, would have been

($100,000 * 5%) / (0.39 [risk] * 100 [options multiplier]) = 128 Contracts

• When you monkey around with trade size.

• Four is close to risk-free; three is not!

• The infinity trade is coming back to earth.

1. Recap Situation

You may have noticed little activity at the Doze lately. The reason is simple: we have been busy investigating and dealing with arguably one of the most extreme events in American-style options trading. The experience taught us a lot and was humbling, to say the least, mainly because we had structured our products to be risk-free at maturity and sized them accordingly, namely a bit larger than usual. The last few weeks wouldn’t have been so intense if we had been more prudent. However, the lessons learned from the first real drawdown under pressure are invaluable. We have developed new products, forged new strategies to contain future explosions of implied volatility and option assignment risks, and generated new, improved hedging principles against transient and sudden directional changes in price from trade start to trade expiration. As a result, we now feel more vital than ever; we are warmed up and stretched: Bring it on, 2023!

To be clear, the AMC trade we have published is solid and safe. As long as you weren't too greedy with the position size, you will come out unscathed and most likely make a substantial profit. However, we at the Doze also established a straddle one strike lower; we sold not only the 4s but also the 3s. A few days later, a second short squeeze occurred in AMC and other meme stocks, causing the short-sale borrow rate to soar from 100% to over 400%. Short-sale lending rates typically range from 0.25% to 3.0% per year, and interest rates on borrowed AMC shares suddenly rose to 1.1% per day.

As a result, brokers assigned deep-in-the-money short calls like mad, mainly at the strike price of 3 and below, because other market participants seemed to prefer lending shares for 1.1% interest per day instead of holding the call options. Not necessarily the most rational effort because those high, hard-to-lend rates are priced into the call options anyway. You'd be better off closing out your long calls unless you sincerely believe AMC is a promising long-term investment with its unlimited dilution and potential bankruptcy around the corner.

AMC Shares - Cost of Borrowing for Short Selling

Occasional assignments are not necessarily a big deal. You buy back the assigned short stock and resume the corresponding short call position. There may be transaction costs, bid-ask spread slippage, and minor mispricing of the stock relative to the option premiums. However, with a highly liquid AMC and very elevated implied volatility, it might even be possible to reverse assignments for a small profit.

Now comes the part that could prove inconvenient. Your broker might approach you at some point during your daily morning routine of reversing option assignments and remind you of the extremely high daily borrowing costs you will have to pay no matter how quickly you flip the trade. He might also ask you not to re-enter the short call position at strike 3 to avoid future assignments and suggest you switch to a short call position at strike 4 instead. This switch will better protect you from another short squeeze, too. However, you will have to give up a significant portion of your potential future profit, and it will take longer to recover from a theoretical drawdown when implied volatility finally declines, and your stock price starts moving back in the desired direction.

Fast-moving markets and the sheer explosion of already very high implied volatility gave the situation an additional edge, driving up the initial value of straddles sold. Not ideal when you are aiming for premium deflation.

Check out the original BrainDoζer below.

MacroDoζer

AMC: Risk-Free Trading

Executive Summary Panic attacks meet wealth destruction. Let the monkey lose, and infinity could be the new terminal. Being friends with MacroDozer isn't so bad as long as we get those freebies. Connect via the new chat feature to guarantee magic & more before the markets close…

Read more

4 years ago · 2 likes · Juri von Randow

2. Why Now?

In addition to our little trading adventure, we would also like to update you on recent affairs around AMC briefly. A lot is happening; the most recent developments further strengthen our AMC trade rationale.

• The upcoming March 14 vote to combine AMC common and APE preferred shares on a one-for-one basis will likely result in a new AMC stock price somewhere in the middle.

(4.96 AMC + 2.44 APE) / 2 = 3.70.

• Although AMC common stock and APE preferred stock are technically the same thing, they never traded level because management was able to dilute APE but no longer AMC since AMC's securities supply via the at-the-market offering agreement was already exhausted in December, so diluting APE was the only solution to survival.

• Once the vote is completed, the new AMC shares will dilute further.

2.1 AMC & APE: Short-Squeezed and Back on the Road to Convergence?

2.2 Trade Entry - Jan 19, 2023

Total: 2.03 Credit.

2.2 Trade Spot - Feb 10, 2023

Total: 1.70 Debit.

The spot paper return on this trade is

2.03 - 1.70 = 0.33

The risk equity at maturity is 0. However, due to the explosion in share price, implied volatility, and high borrowing rates on short sales, the total premium rose to 2.25 for a few days, resulting in a maximum risk capital of 0.22, leading to a spot return on equity of

0.33 / 0.22 = 150%

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Executive Summary

• White Collar must be satisfied with sixteen percent.

• Firecrackers must abide by the law of gravity.

• Carol Flaton must flatten the stock price.

1. Recap Situation

We elaborated on the Last Short Squeeze, Betrayal by Dilution, and Random London Destructions. We've compared the briefcase lawyer to the gunman and now find that White Collar can't even crack the sixteen percent mark. What a trade you can’t refuse. And the Queen of Queens only knows what the gunslingers will pocket.

Check out the original BrainDozer below.

MacroDoζer

BBBY: Delayed Fireworks 2023

Executive Summary Short squeeze vs. long pump. We rocket, orbit, dilute: when the briefcase lawyer trumps the gunman. Are store closure lists more powerful than gravity? We might find out at The City’s next paint party. 1. Why Do I Care Right Now? If this is the ninth time in twenty-four months that a short squeeze or long pump has hit you, realize that this may be your last chance to dump additional shares to old-fashioned short sellers or high-rolling retail rebels…

Read more

4 years ago · 5 likes · Juri von Randow

2. Why Now?

Delayed fireworks we have. Most crackers are already coming down fast, burned to ashes as they usually do. We didn't expect such a sudden default notice from JPMorgan and a public statement that a debt restructuring under the U.S. Bankruptcy Code is now on the table as we write.

Carol Flaton has more than thirty years of experience in the restructuring of distressed situations and has just joined the Board as an independent consultant. This is neither good news nor bad news for the current shareholder. However, while the banks will optimize their overall positions if she chooses to discharge the company's debt through a bankruptcy filing - an excellent opportunity for a second, debt-free life - shareholders will be left holding their almost empty bags.

We are not in the gambling business; our strategy is to discover events with high implied volatility that will settle in specific ranges with favorable risk-reward setups. Bed Bath & Beyond, as far as we can fortune-tell, will not settle in any range anytime soon and could very well be settling down close to zero. We're out.

3. Trade Execution

3.1 Trade Entry - Jan 12, 2023

We were filled at 1.07 and 1.15. We use the mean value of 1.11 to calculate the return on equity.

Total: 1.11 Credit.

3.2 Trade Exit - Jan 26, 2023

Total: 0.97 Debit.

The absolute return on this trade is

1.11 - 0.97 = 0.14

The equity at risk was 0.87, resulting in a return on equity of

0.14 / 0.87 = 16.1%

For instant trade updates, early ideas, or other magic, join our Early-Dozer Live Chat.

If you want the app to notify you of new messages, you'll need to opt in by posting something in reply.

• No last-minute surprises at the Doze.

• No time for fixing and rolling trades.

• No less than +32% return on equity, and,

• No, we didn’t buy gold!

1. Recap Situation

We were overly snarky in the run-up to Christmas and challenged Stephanie Kelton and the Queen. We also shout out to Jerome Powell and the entire Forbes 100 crowd.

We liked the low correlation of U.S. government bonds with the broader stock market and thought that rally was premature; rates will stay high for a while. We haven't fought the Game Master, and we won't.

We have also clarified why it is impossible to fight inflation by withdrawing excess liquidity through taxes. Policymakers, by and large, lack the power, tools, and knowledge to do so fast and effectively.

Check out the original BrainDozer below.

MacroDoζer

TLT: MacDoζe Winter-Blows 4/4

Executive Summary We introduce Doζer Fact, blue-bloodily. Is it okay to be a bore now and then? We asked on the fixed-income floor. Only Stephanie Kelton knows how to drain liquidity through taxation. Year End: We are brain-doζed yet delighted. 1. Why Do I Care Right Now…

Read more

4 years ago · 5 likes · Juri von Randow

2. Why Now?

Government bonds can be unpredictable in the short term, especially when new inflation data is released regularly. Contract maturity is twenty-five days away, and we are not interested in spending time fixing and rolling trades. A last-minute breakout above the 200-day moving average would be tiresome. It's unlikely, but we are over treasuries for now.

3. Trade Execution

3.1 Trade Entry - Dec 19, 2022

Total: 6.25 Credit.

3.2 Trade Exit - Jan 23, 2023

Total: 4.75 Debit.

The absolute return on this trade is

6.25 - 4.75 = 1.50

The equity at risk was 4.75, resulting in a return on equity of

1.50 / 4.75 = 31.6%

For early trade ideas, instant updates, or other magic, join our Early-Dozer Live Chat.

If you want the app to notify you of new messages, you'll need to opt in by posting something in reply.

• Panic attacks meet wealth destruction.

• Let the monkey lose, and infinity could be the new terminal.

• Being friends with MacroDozer isn't so bad as long as we get those freebies.

• Connect via the new chat feature to guarantee magic & more before the markets close.

1. Why Do I Care Right Now?

In theory, the risk-free rate is the return an investor would earn on a completely risk-free investment and is usually expressed as a percentage over one year. In practice, it is difficult to find anything with zero risk. U.S. government bonds seem risk-free as long as the U.S. government doesn't go bankrupt. Subtract inflation, and you have the perfect recipe for anxiety attacks and wealth destruction.

Now that we have the soft stuff out of the way, we can move on to the concept of risk-free trading.

In theory, a zero-risk trade is an entirely risk-free short-term investment in which the investor earns an infinite percentage return, usually expressed with the infinity symbol, with time and space evaporating. In practice, it is difficult to find a trade with zero risk. However, MacroDozer appears to have made the impossible possible as long as our derivative brokers remain solvent. And we do argue that U.S.-regulated exchanges can be more solvent than the Federal Government.

To help you understand the situation better, imagine that you enter a casino. You go straight to the roulette table, and your bet is free. Your family is close friends with the Powells, and Jerome creates that bet for you, for free, digitally, very quickly, as high as you want, out of thin air. The limit is the table maximum. Your chances of winning are a little less than fifty percent, and your chances of losing are zero because Jerome is covering the bill. It would be foolish not to give it a go.

Our AMC setup below is also risk-free, and we reckon there is more than a fifty percent chance that the share price will fall back to 4.00 within the next four weeks. Why? Because we believe that the events surrounding AMC are nothing more than a major financing gig. Apey business. No one seems seriously interested in restructuring or reinventing the core business so as not to suffocate in the vacuum of a shrinking market and a dying industry.

Back to the free bet: you are close friends with MacroDozer, and the limit is the broker's capital requirement for events such as option exercise reversal or temporary price fluctuations due to sudden changes in implied volatility or asset price on the way to maturity. However, depending on the broker, the capital requirement may be zero or even negative, which means that no money is employed, and any profit divided by zero is mathematically infinite. Our broker seems confused and alternates between negative, zero, and slightly positive capital requirements. But for the sake of argument, we assume zero, and for practical trade execution, we plan for a margin of safety.

2. Useful Background Information

We have no words for AMC Entertainment's pure play financing gig. AMC stock, APE stock, splits, conversions, and the hero of the saga, as always: Dilution. No more words about a drama that continues to shift from movie theaters to boardrooms.

For more background information, see our first AMC BrainDoζer.

MacroDoζer

AMC: Theatres Open, Drama Continues

Executive Summary Marketing Moguls and German Shepherds work hand in hand. Professional publicity stunts revert to medians faster than ever. Troubled AMC gambles on Wall Street using investor money. Stock Promoter & CEO Adam Aron sells private shareholdings at highs…

Read more

4 years ago · Juri von Randow

3. Trade Execution

We understand that occasionally we send out BrainDozer articles just before the market closes. Getting them ready faster is not always possible, but we will communicate trade ideas in real-time via our new subscriber chat feature, potentially already days before. If you want to receive time-sensitive information immediately or feel like chatting with us, please give it a go here.

We are selling a bearish straddle at 4 with wings at 2 and 6 that expires on Mar 17, 2023. If you get filled at or above a credit of 2, the trade will be risk-free with a max loss of 0. If you get filled below a credit of 2, there will be a small risk, and standard trade sizing is back on the table.

3.1 Trade Entry - Jan 19, 2023

Total: 2.03 Credit.

To conclude the magic, we think it is appropriate to return to the rhetorical question posed in the subheading: What happens when the percentage return on risk-free trades discounts cash flows? The percentage return of risk-free trades with no capital employed is mathematically infinite. Any cash-flow-generating project that you discount at infinity won’t be worthwhile to pursue. We strongly advise focusing on the risk-free business instead if you have the luxury.

4. Final Comments

Expect updates on BrainDoζers within 4-6 weeks. We use the exact heading, ending with (+/- xy%), and label the cover cartoon with a red Cloζed stamp. That way, the performance will be easy to follow.

We are not sending BrainDozer updates via email unless you specifically ask for it here. We want to keep the information flow light and to the point. You can still freely access all updates on MacroDozer the moment they are released.

My name is Juri von Randow. You can find me on the top banner to the right. MacroDozing, as if there was no tomorrow. (Email version only.)

Feel free to share. Sincerely.

Executive Summary

• Short squeeze vs. long pump.

• We rocket, orbit, dilute: when the briefcase lawyer trumps the gunman.

• Are store closure lists more powerful than gravity?

• We might find out at The City’s next paint party.

1. Why Do I Care Right Now?

If this is the ninth time in twenty-four months that a short squeeze or long pump has hit you, realize that this may be your last chance to dump additional shares to old-fashioned short sellers or high-rolling retail rebels.

Fortunately, Bed Bath & Beyond's management has ensured it can do just that. Up to five times the current free float, six hundred million additional shares want to be thrown into the market as long as the music plays. Who cares about dilution when the rocket is on fire for the big finale; not even Richard Brandson seems to be going for orbit anymore.

These ‘blank check’ At The Market Offerings, where financial advisors try to place new shares smoothly into rallies - $150 million per assignment for BBBY - are extreme measures that we often see in the early stages of (bio)tech companies—raising money as a major pillar of the business model. At the same time, revenue or profitability seem to be vague ideas to be found somewhere in the distant future. Typical for young and upcoming, but also outdated or failing businesses.

On the debt front, Lazard is helping convert over a billion dollars worth of senior notes into shorter-dated convertibles; why not when shareholders seem to be hoovering it all up?

What a party. Reminds me of those demolition paint parties in London where anything goes. Couplings, meds, tunes & colors. Pick a room, find your best friends in action; look for support, discover your most conservative associates living the liberal. Color as a rebase. I am just happy I didn't inhale.

Back to BBBY's I'll-Do-Anything-To-Survive theme party. Again, a lot of colorful rebasing going on here; take the magic brush and apply the financial engineering filter, add a few management stock promotion skills and an easily impressed and playful retail prey, and you've got a New Year's Eve party that seems never to end.

The situation is ludicrous, and we want to be part and play. The last three weeks have been boring, and now, with high implied volatility and expensive option prices in the house of BBBY, we can finally structure a trade you can't refuse. We want to be like the briefcase lawyer who can steal more money than the gunman. Resolutions 2023.

2. Useful Background Information

We were able to close a BBBY position back in September 2022 successfully. Not much has changed in the meantime about the company’s situation, except there wasn't enough time to get the numbers straight for the last earnings call, and management seems to be still fiddling around with those store closure lists.

Feel free to check out our first BBBY BrainDoζer close below.

MacroDoζer

BBBY: Beyond Beds, Baths & Imagination (+37%)

Executive Summary MacorDoζer on holidays. We are closing the trade nevertheless. 1. Recap Situation See below 2. Why Now? Good job numbers, share price retrace, 14 days maturity, gamma risk high, last call…

Read more

4 years ago · Juri von Randow

3. Trade Execution

Since we are unsure where the short squeeze will end and how long it will take to get back to our temporary base of 2, we have eliminated the upside risk by going long the call strike at 3. This will also hedge against a potential takeover bid that we consider unlikely.

If the price stays elevated for longer, we either let the trade expire or add more credit and extend it to the next month if feasible. BBBY seems to have enough cash to survive another two or three quarters, and current share price levels will help fill the war chest via the At The Market Offering agreement with their financial advisors.

We are selling a bearish straddle at 2, with no downside wing and 0 as our downside risk, and one upside wing at 3, expiring Feb 17, 2023.

The break-even to the downside is 0.93; there is no risk to the upside.

3.1 Trade Entry - Jan 12, 2022

Yesterday, we got filled at 1.07, and today at 1.15. We take the lower number for the return on risk capital calculation.

Total: 1.07 Credit.

4. Final Comments

Expect updates on BrainDoζers within 4-6 weeks. We use the exact heading, ending with (+/- xy%), and label the cover cartoon with a red Doζed stamp. That way, the performance will be easy to follow.

We are not sending BrainDoζer updates via email unless you specifically ask for it here. We want to keep the information flow light and to the point. You can still freely access all updates on MacroDoζer the moment they are released.

My name is Juri von Randow. You can find me on the top banner to the right. MacroDoζing, as if there was no tomorrow. (Email version only.)

Feel free to share. Sincerely.