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!

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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
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    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?

    Reply
    • December 31, 2019 at 10:57 pm
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      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.

      Reply

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