Closed two hedges, opened two more.
music selection: “Becoming” — Sneaker Pimps
Since 2018, I have been accumulating some small long put positions in companies I think have too much debt, structural problems, or litigation exposure. Today, I adjusted some of those positions.
On 28FEB2019, I bought the 15JAN2021 expiry 27 put in THC for 7.45 a share. I sold today for 10.60. The trade was in force for 420 days and earned 42% or 37% annualized.
On 20SEP2018, I bought the 15JAN2021 expiry 20 put in SC for 4.00 a share. I sold today for 8.60. The trade was in force for 581 days and earned 130% or 115% annualized.
I also bet against two restaurant chains with dangerous levels of debt, thin margins, and serious COVID-19 problems. The chains will reopen soon but with 6 foot social distancing still in place. I think the market is pricing in full recovery but this will be a time of negative earnings. These two have already nearly maxed out their borrowing limits and more pain is coming.
First is Darden (DRI). I bought the 15JAN2021 expiry 55 put at 9.80 a share. I also bet against Dave & Busters (PLAY) by buying the 15JAN2021 expiry 10 put at 3.70 a share (3 contracts).
All together, I raised about 700 dollars while booking 1,235 in profits. That income means a lot while my portfolio remains beaten up by COVID-19. It is not likely I will trade on Monday. I am still waiting for the S&P to break above its 200 day moving average to get back into the VXX game.
Devour your prey raptors!