A bearish and a bullish spread.

music selection:  “If You Needed Somebody” — Bad Company

weigh-in:  220.0 +1.0

First up, I’m betting against Macy’s (M).  I don’t expect them to be bankrupt anytime soon (and I actually have a stink bid open on one of their bonds).  But I don’t expect them to suddenly return to glory – ever.  Retail is a two horse race between Amazon and Wal-Mart.  So with M trading at 7.07, I am opening a bear put spread at the 8/9 strikes and 18SEP2020 expiry.  I got pricing of 80 cents per share on 18 spreads.  That puts 1,440 capital at risk for 40 days with 13.15% downside protection.  Should that not be breached, the full profit potential of 360 dollars will be realized for a 25% gain or 294% annualized.

New to the raptor is Zendesk (ZEN). This is a SaaS company that is revolutionizing customer service.  You can’t run a proper call in center or help desk with similar software and ZEN is the marketshare leader and fastest growing competitor in the space.  I’m being a little more aggressive here as my bull call spread is not in the money.  Or at least one strike isn’t.  I’ll need the price to rise by 1.74% by 16OCT2020 (68 days in force) to realize the full profit.  I bought the 85/87.5 spread with the spot price at $86.00.  I got 1.30 pricing per share on 9 spreads, putting 1,170 capital at risk.  Should I reach my price target, the full profit of 1,080 will be earned for a 92% return or 1,087% annualized.  With a nice uptrend in place on the charts, I like my chances.

Devour your prey raptors!

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