Think about the beverages you consume: maybe you're a fan of Coca-Cola, Pepsi, or Budweiser. Or perhaps you prefer Heineken or a Red Bull energy drink. All of these popular drinks are packaged in Ball's sustainable aluminum cans.
Beyond beverages, Ball's containers also hold many household items like personal care, cooking, and cleaning supplies. It's quite likely you buy products in Ball's cans every week.
Ball Corp is now in a promising stage of operations, boosted by better cash generation and a new leadership team that appears focused on stricter capital management and reducing debt. You should know that Ball's debt hasn't received an investment-grade rating from Moody's or S&P yet. Nevertheless, the team's dedication to credit improvement and fiscal prudence provides a path to strengthen the balance sheet, possibly leading to rating upgrades, reduced interest expenses, and less stock price fluctuation.
For fiscal 2027, analysts project the company will generate a free cash flow yield above 4%. The stock trades at a reasonable 14 times the adjusted earnings per share of $4.52. Wall Street expects slight revenue growth in line with the economy, along with improving operating margins and net income year over year.
Here is where a pro saw an opening. Khouw recommended selling the August $60 put option on Ball Corp.
Get the market news that matters in a five-minute read with Market Briefs, our free daily newsletter
A put option is a contract that gives the buyer the right to sell shares at a certain price. When you sell one, you collect a cash premium upfront. In this case, the premium is $1.20 per contract. In return, you take on the obligation to buy shares at $60 each if the stock falls below that level before the option expires.
The math works out like this. If Ball Corp stays above $58.80 - the break-even price after accounting for the premium - the seller keeps the full $120. The trade requires significant margin and is not for beginners.
But the logic behind it is straightforward: Ball Corp's stock has historically moved only mid single-digits on earnings day and less than 8% on average a month later. The trader is betting the earnings report will not cause a big enough drop to break the trade.
Ball Corp is set to report earnings in the first week of August. Khouw recommended selling the put before that report to take advantage of higher option prices. When a company is about to announce results, options become more expensive because nobody knows what will happen. That higher cost - called implied volatility - means sellers collect a bigger premium.
The historical record suggests that extra premium is worth capturing. The stock does not tend to swing wildly after earnings, so the odds of it crashing through $58.80 look fairly low from that angle.
You do not have to trade options to pay attention to what is happening at Ball Corp. The underlying story is the sort of thing that can matter for regular stock investors too.
If the credit rating gets upgraded, the company's borrowing costs drop, which should help profits over time. A stock trading at 14 times earnings with a 4% free cash flow yield is not screaming cheap, but it is not expensive either.
And Ball Corp's aluminum packaging is not going anywhere. People keep drinking. Companies keep packaging.
A disciplined team that clears up its balance sheet can make a real difference in a steady business like this one. Whether you trade options or just hold the stock, that kind of clarity is worth watching.
Join Market Briefs, our free daily newsletter, for a quick daily rundown of the markets
