Stink bidding for Hershey.
Music selection: “Doctor My Eyes” — Jackson Browne
weigh-in: 212.4 +1.8
I’ve admired Hershey (HSY) for years. It has a strong brand and a great capitally efficient business. It is also a strong performer when it comes to stock return. I’m using elevated volatility to make a long dated stink bid. It is highly unlikely to ever get filled but I earn some nice cash for waiting.
With shares trading at 129.77, I sold two contracts of HSY220121P00115000 for 12.40 a share. The trade has 11.68% downside protection before profits are threatened and a breakeven at 21.20% price decline in the underlying. That would be a fantastic price for Hershey and I’ll gladly pay if it is there at expiry.
The trade will be in force for about 206 days and yields an expected 6.49% on an annualized basis. In my mental buckets this is a lot like one of my bond investments. It pays an acceptable “coupon” and has some upside potential at maturity. And I collect 2,480 in cash that is mine to keep win, lose, or draw.
Devour your prey raptors!