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!
Good picks! I bet these suckers dither on cutting dividends until their cash dries up.
Also take a look at DDS and LC.
Those tickers might as well stand for Doomed Department Store and Losing clients’ Cash! I’m short LC, but spreads could probably deliver profits faster.
Agree that DDS is toast. But I don’t like the pricing of their long dated puts. Not familiar with LC.
Here’s a saga about LC:
https://forum.mrmoneymustache.com/investor-alley/lending-club-time-to-panic/