Seven Setups Paying Up to 60%, Starting With the Steel Detroit Can't Buy Anywhere Else

The company

Cleveland-Cliffs is American steel, and it owns more of its own chain than almost anyone else in the business. It mines the iron ore, processes the scrap, makes the steel, finishes it, and runs the stamping, tooling and tubing operations on the back end. Iron ore goes in one door and a finished automotive part comes out the other.

That automotive piece is the part worth understanding. About 30% of 2025 sales went straight to carmakers, with another 29% to infrastructure and manufacturing. Steel for the outside panel of a car is not rebar. The strength, the surface finish, the corrosion resistance, the way it has to bend without cracking... all of it has to be consistent, and that lets automotive steel price above commodity grades.

Why I'm interested at $11

Let me be plain: this is a cyclical recovery story, not a wonderful business. It has been through a weak stretch and it is still losing money on a GAAP basis.

But the direction has turned. Second-quarter revenue rose from $4.9 billion to $5.2 billion. Adjusted EBITDA jumped from $95 million to $286 million. Operating cash flow came in at $230 million. The net loss was still $134 million, so nobody should pretend this is fixed... it is improving.

There's a structural tailwind underneath it too. Cliffs has locked in multi-year fixed-price contracts with major automotive customers, and US steel and auto tariffs favor steel made here. Management has been cutting costs and shutting down the operations that weren't earning their keep.

And there's a piece most people miss entirely. Cliffs makes specialized electrical steel, the kind that goes into EV motors and power transformers. That's not an old-blast-furnace story. That's grid buildout and electrification, and it's sitting inside a company the market still prices as pure commodity steel.

My estimate of business value is about $13 a share. At $11.92 today that's only about a 9% margin of safety, which is not enough for me to simply go buy the stock. But our $11 strike, minus the premium, puts our real cost at $10.85, and that's about 16% under the number. That gap is the whole reason this trade interests me and the stock doesn't.

Why we'd be glad to own it at $11

• Real cost of about $10.85, roughly 16% under my $13 estimate of business value
• Adjusted EBITDA tripled quarter over quarter, $95M to $286M
• Multi-year fixed-price automotive contracts, plus tariffs that favor domestic steel
• Electrical steel for EV motors and transformers that the market isn't paying for
• Earnings not until October 19... nothing due inside our window

Risks at a glance

Somewhere out there is a fund manager sitting on steel exposure who wants a floor under it into the end of the quarter, and he'll pay us for that floor. We're glad to take the other side. Either the escrow comes home with our $15-plus banked from day one, or we own a business I value at $13 for a real cost of $10.85 and start selling Rebound CALLs on it.

• About $7.7 billion of long-term debt and heavy sustaining capex. This is the reason my margin of safety isn't wider, and it's the thing to watch if steel prices roll over again.
• Still unprofitable on a GAAP basis. The turn is real but it is not finished.
• This is the most volatile name on the list. If the market has a bad week, CLF has a worse one.
• Open interest at this strike is 394 contracts, lighter than most of our picks. Use a limit, not a market order.

The company

Pinterest is where people go to plan something before they buy it. A kitchen remodel, a wedding, a pair of boots. That sounds soft until you think about what an advertiser is actually buying: a person who has already decided they want something and is looking for which one. That's a very different customer than someone scrolling a feed to kill ten minutes, and it's why the platform earns the ad rates it does.

Why the premium is here

Pinterest throws off real cash. Last fiscal year the business produced $1.28 billion of operating cash flow on almost no maintenance capital spending... $7 million. That's a software business in the truest sense: the machine, once built, costs very little to keep running.

The market knows this, and prices the stock accordingly. That's the honest frame here. This is not a bargain hiding in plain sight. It's a good business the market already likes, trading in a range it has held, and the options on it pay us well to wait for it at $18, which is 7.3% under where it trades today.

That's a trade I'll take all day, and it's a different posture than a value pick. With Cleveland-Cliffs I want the discount because I might end up owning it a while. With Pinterest I want the cushion and the cash flow, and if the shares land in my account I'm holding a profitable platform with no debt problem while the Rebound CALLs pay me.

Why we'd be glad to own it at $18

• $1.28 billion of operating cash flow against $7 million of maintenance capex
• Advertising built on purchase intent, not idle attention
• 7.3% of room between today's price and our strike
• Earnings not until November 3... nothing due inside our window

Risks at a glance

We're the ones being paid to say "we'll take those shares at $18." If the buyer on the other side never needs us, our $17-plus was banked the moment we sold.

• Stock compensation is the real argument against this one. Roughly $880 million of it last year, against $1.28 billion of operating cash flow. Almost 70 cents of every dollar of cash the business generates goes back out the door to employees in shares. However you feel about that, it means the per-share math is far less generous than the headline cash flow suggests.
• Ad spending is cyclical. A soft quarter for advertisers is a soft quarter for Pinterest.
• Open interest at this strike is 146 contracts. Thin. Use a limit order and be patient.
• The stock is up nearly 2% this morning, so the premium may be slightly better if it settles back.

The company

Campbell's makes soup. It also makes Goldfish, Pepperidge Farm, Prego, V8, Snyder's and Cape Cod chips. Boring on purpose. People buy this stuff in good years and they buy more of it in bad ones.

The number that tells you the most about this business: its beta is essentially zero. When the market convulses, Campbell's mostly doesn't. That is a rare and useful thing to own inside a book full of semiconductors and payment processors.

Why this one, at this price

This is the one pick on the list where my valuation work says the stock trades well under what the business is worth, not merely at a fair price. My estimate of business value is about $31 a share against a $21.41 price. The conservative case, the one that assumes very little goes right, still lands near $28.50.

The buy zone I'd want for an outright purchase is $24.75. Our real cost if we're assigned is $20.70, which is well inside it. So if these shares land in my account on September 25, I am not managing a problem. I'm holding a business I think is worth $31 at a cost of $20.70, collecting Rebound CALL premiums on it, and in no hurry whatsoever.

We've sold PUTs on Campbell's twice already this year, in July and again in August. Both expired worthless and both escrows came home, at 41% and 27% annualized. This is the third time around on a business I keep being glad to stand underneath.

Why we'd be glad to own it at $21

• Real cost of $20.70 against my $31 estimate of business value
• Even the conservative case lands near $28.50
• Beta near zero... this barely moves when the market does
• Pays a dividend while you hold it
• Earnings already reported September 3, nothing due until December 8

Risks at a glance

• Only 1.9% of cushion. This is the tightest strike on the board, which means the fork at expiration is a real two-sided one: either CPB finishes above $21 and the escrow comes home, or we buy at $21 and start selling Rebound CALLs. Only take this one if you're happy with either branch.
• Packaged food is a slow-growth business with real private-label pressure. Nobody is predicting a boom here.
• The stock goes ex-dividend on September 30, inside the window. That normally pulls the share price down by roughly the dividend on that date.
• Open interest at this strike is 146 contracts. Thin. Limit order, and give it time.

The company

Shift4 runs the payment plumbing for restaurants, hotels, stadiums and casinos. When you tap a card at a ballpark concession stand or settle a hotel folio, there's a decent chance Shift4 moved that money. It isn't a consumer brand. It's infrastructure that gets paid a sliver of every transaction that crosses it.

Last quarter the business did $624 million of revenue and earned $1.32 a share, ahead of the $1.26 the street expected.

Why the $40 strike

This is the widest cushion on the board, and that's the point of it.

My estimate of business value is about $48.89. At $46.00 the stock is priced about right, and I wouldn't chase it here. The price I'd actually want to buy it at is $39.11. Our strike is $40, and after the premium our real cost lands at $38.95... a few cents inside that number.

So this is the cleanest version of the whole strategy. We get paid about 30% annualized to sit and wait, and the only way we end up owning it is if the market hands it to us at the exact price we wanted in the first place.

Thirty-two days is also the longest window on this week's board, which is why the dollar premium is the biggest of the seven.

Why we'd be glad to own it at $40

• Real cost of $38.95, just inside my $39.11 buy zone
• 13% of room between today's price and our strike, the widest on this week's board
• $624 million quarterly revenue, EPS of $1.32 against $1.26 expected
• Transaction infrastructure that gets paid whether the venue has a good night or a bad one
• Earnings November 5... clear of our October 16 expiration

Risks at a glance

Somebody out there wants downside protection on a payments position into late October and will pay us $105-plus for it. Either they never need us and the escrow comes home, or we buy a business I value near $49 for a real cost of $38.95.

• The balance sheet is the weak spot. This company carries real leverage and my survivability work grades it poorly. That's the single reason I want the discount here rather than owning it outright at $46.
• Share count has been growing. Dilution is a live issue, not a theoretical one.
• My valuation on this one rests on a single method, so treat the $48.89 as a reasonable estimate rather than a precise figure.
• Thirty-two days is a long time to have $4,000 committed. That's the trade-off for the bigger premium.

We've traded this one before

Back on July 20 we sold the BSX $40 PUT into earnings week with a published stand-down price. On August 11 we bought it back for about a nickel, locking in roughly 41% annualized over 22 days on the $4,000 of escrow, and that capital rotated straight into the next setup. That was an Early Exit Encore, and it worked exactly the way it's supposed to.

So this is a name we know, and a company we were comfortable owning then.

Why owning it at $43 for four days is an acceptable risk

Boston Scientific makes medical devices... stents, heart valves, catheters, the ablation tools cardiologists use. Demand for that doesn't move with the business cycle. Its beta is 0.57, meaning it swings about half as hard as the market does.

Two things make me comfortable with the short window here. First, the Rebound premiums on this stock are decent. If we do get assigned at $43, we're not stuck holding dead shares... there's a real, liquid CALL market at that strike, and we'd be collecting on it right away. That's the whole machine, and on BSX it runs.

Second, $43 is still below where the street thinks this company is worth. Analyst targets on Boston Scientific run from a low of $50 to a high of $100, with the consensus at $66.30 and the median at $63.50. Our strike is beneath the entire published range. That's not a guarantee of anything, but it does mean we'd be buying at a price no covering analyst currently thinks is expensive.

Worth knowing too: three directors bought roughly $554,000 of stock in the open market between May 19 and 21, at prices between $55.92 and $56.95. That's well above today's $44.87, and there were no insider sales in the second quarter.

Why we'd be glad to own it at $43

• Below the lowest analyst target on the street ($50)
• Three directors bought ~$554k in the open market at $55.92–56.95, no Q2 sales
• Rebound CALLs at this strike have a real, liquid market if we're assigned
• Beta 0.57... roughly half the market's swing
• Earnings October 28, well clear of Friday's expiration

Risks at a glance

• Only 4.2% of cushion, and only four days. Short windows cut both ways: less time for something to go wrong, but also less time for a dip to recover.
• My own valuation work is far more conservative than the street's here. On owner earnings I get a much lower number than $50, which is exactly why I want this as a short-dated trade and not a long-term holding at this price.
• The stock is up 4.4% today. That run is why the premium has thinned and why you'll need to work the limit.
• The bid sits at $0.10 against a $0.20 ask this morning. Set your GTC at $0.15 and let it sit. There's no rush.

The spread is wide this morning (bid $0.10, ask $0.20). Post at $0.15 and give it patience... this is a four-day trade and there's no reason to chase it.

Why this one is here

Of all seven names this week, Netflix scores highest on the one question I care about most: would I be happy owning this business? On my scorecard it's the only A in that category on the whole board.

You know the company. What matters for our purposes is the shape of it: recurring subscription revenue, a library that doesn't need rebuilding every year, pricing power it has proven it can use, and an advertising tier that is still early. Last quarter the business did $12.56 billion in revenue and earned $0.80 a share.

This is not a discount story and I'm not going to dress it up as one. Netflix is a company the market has liked for a long time and prices accordingly. That's precisely why it works as a four-day PUT: a name with this much market support and this much option liquidity lets us set our price at $77, collect, and move on. And if it ever did land in the account, the Rebound market on Netflix is as deep as they come.

Why we'd be glad to own it at $77

• The highest "would I own it" score on this week's board
• Recurring subscription revenue with demonstrated pricing power
• $12.56 billion of quarterly revenue, $0.80 per share earned
• 5,374 contracts of open interest at our strike... real liquidity both ways
• Earnings October 20, clear of Friday's expiration

Risks at a glance

• 20% annualized is the lowest number on this week's board. You're being paid less here because the market sees less risk, which is the honest trade-off.
• Only 4.5% of cushion. The stock is up 4.2% today, and a give-back of that move puts our strike in play.
• Streaming competition is relentless and content spending never stops.
• $7,700 of escrow for a four-day trade is a lot of capital per unit of premium. If your account is small, Picks 1 through 3 do more for you.

What happened this morning

Intel is down about 4.7% today. That selloff is the entire reason this premium is worth talking about: yesterday this contract was worth $0.14, and this morning it's $0.30.

That cuts both ways, and I want to be straight with you about it. A fatter premium after a sharp drop means the market is pricing in more risk than it was yesterday, not less. If INTC keeps sliding toward $87.50 this week, you're in a different trade than the one I'm describing. Four days is short, which limits how far that can go, but check the price before you fill.

Why I'm willing to stand under it

The last quarter was a genuine beat, not a rounding error. Revenue came in at $16.13 billion against about $14.43 billion expected, and earnings came in at $0.42 a share against $0.21 expected. Double the expected profit.

There's something else the numbers say that's worth knowing. My cycle read on Intel is "extended," which is my way of saying the stock has already run a long way and I don't want to sell a strike anywhere near the money on it. So we're not. At $87.50 our strike sits a long way beneath today's price, on a four-day contract, with 5,038 contracts of open interest at the strike. That's a deliberately conservative posture on a name that has moved a lot.

Why we'd be glad to own it at $87.50

• 10.8% below today's price, the second-widest cushion on this week's board
• Last quarter's revenue beat by roughly $1.7 billion, earnings came in at double the estimate
• 5,038 contracts of open interest at our strike
• Four-day window limits how much can happen
• Earnings October 22, well clear of Friday

Risks at a glance

• The stock is falling as I write this. Down 4.7% today. Check the price before you fill, and if it's approaching $87.50 by the time you look, skip it.
• Intel's turnaround is a multi-year project with real execution risk, and the foundry business is expensive.
• My own valuation work says the market has already paid for the turnaround story. I'd own this at $87.50 for four days. I would not call it a bargain.
• $8,750 of escrow makes this the largest position on the board. It's the one most likely not to fit a smaller account.

Note the strike carefully: $87.50, not $88. There is a separate $88 contract trading a few cents higher with different open interest. Make sure your order line reads 87.5.