Buying DE call contracts.
Deere & Co. (DE) sells agricultural equipment to help farmers increase their crop yields.
At at time when food inflation is surging, and fertilizer prices are rising sharply, DE’s high-tech farming equipment is in high demand.
Gone are the days of boring tractors. Today’s “precision farming” equipment analyzes detailed information about weather, soil conditions and much more to give farmers the best yield for their resources.
Shares of DE pulled back after a first quarter breakout. But the stock still looks very attractive on a valuation basis, and is now sitting at a key support level.
Buying in-the-money call contracts gives us a chance to profit from any positive movement for DE over the next several weeks. Meanwhile, these call contracts should retain some extra value even if the stock pulls back further.