Two new trades

music selection:  “Got You Where I Want You” — The Fly’s

weigh-in:  209.0 n/c

I opened two new net debit spreads today.  I did this from my phone on the road to Galveston Island for a day with the sexy Lady Lizard in my life and her son.  Thus, this report comes later in the day than usual.  I continue to buy one bullish and one bearish spread each week to keep myself market neutral.

My bullish trade is in Freshpet (FPRT).   I opened a bull call spread with the 45 and 50 strikes and 21FEB2020 expiry.  I got pricing of 4.588 per share.  The trade will be in force for about 54 days and yields an expected 14% or 55% annualized.  This comes with downside protection of 15.37%.

My bearish trade is in Santandar Consumer (SC).  I bought the 25/26 strike bear put spread for 82.45 cents per share.  The expiry is 17APR2020, meaning the trade will be in force about 110 days.  The trade enjoys 7.34% protection against a move against me and yields 22% or 73% annualized.

It is late in the day and I have other errands to run so I’m going to skip my normal rumination about portfolio management and the merits of the individual stocks.

Devour your prey raptors!

Monday Trades With Yields up to 73%

Never miss another opportunity to devour prey!

2 thoughts on “Monday Trades With Yields up to 73%

  • December 31, 2019 at 7:31 pm

    You went bullish on FRPT with its multi-billion dollar valuation and no earnings, and bearish on SC with a PE ratio of 8.6. This seems like a reversal of the value-tilted rationale you’ve applied in the past, (e.g. PTON). Do you now have an expectation for a short-term burn-up prior to the next correction? Diversifying your bets in case value lags? Or are these stocks selected based on their individual merits and demerits?

    • December 31, 2019 at 10:57 pm

      FRPT turned its first net profit in the most recent quarter. I think that is remarkable for a company that is ramping up so fast. SC is exposed to subprime lending and I expect it to be one of the weakest links in the economic chain going forward. P/E doesn’t always tell the full story (really, if you are going to use a price metric, I recommend P/FCF) and I think these are both examples where looking at just the financials could be misleading.


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