Bought a BPS in VFC.

music selection:  “Say You Will” — Foreigner

weigh-in:  219.2 +1.6

My first trade of 2021 follows the same theme as much of 2020. I’m limiting my risk and position size by buying spreads.  I’m also doing what I can to improve my win rate by buying in the money.  Finally, I’m going with big slow moving Dividend Aristocrats that are unlikely to breach my downside protection over a two month time frame.

VF Corporation (VFC) is a dividend aristocrat with 47 consecutive years of dividend increases.  They make and market lifestyle apparel for men, women, and children, as well as footwear.  The stock is slow moving and down over the trailing twelve months.  An ideal candidate for an in the money bear put spread.

With shares trading at 86.80, I bought the 92.5/97.5 strikes bear spread (10 spreads).  I paid a net debit of 3.8410 per share for the spread.  I used the 19FEB2021 expiry, yielding 47 days till expiration.  The trade enjoys 6.57% protection against an upward move in price during that time.  Should the 92.5 strike  not be violated, the spread will be worth 5.00 a share 47 days from now.  That is good for 1,159 in profits on 3,841 of capital at risk.  The return would be 30% or 234% annualized.

I currently have 9 spreads active.  Six are bear spreads and three are bull spreads I did not detail here as they were recommended to me behind a paywall.  I will detail the results when the trades close.  All trades are in the money with only one bull spread currently price threatened.  Here’s to 2021 behind better than 2020!

Devour your prey raptors!

Bear Put Spread VF Corporation with yield up to 234%

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2 thoughts on “Bear Put Spread VF Corporation with yield up to 234%

  • January 5, 2021 at 10:15 pm
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    I wish there was a different acronym than BCS / BPS. That could mean bull or bear.

    Anyway, with covid cases rising, I’d consider a one month bearish spread on SPG and then see how vaccine distribution is doing.

    Reply
    • January 5, 2021 at 10:58 pm
      Permalink

      The bright minds on Wall Street should have picked animal mascots with different first letters! Kittens and Pigeons wouldn’t rouse the same level of emotion though. I’ll look into SPG but I’m likely to continue working my way down the aristocrats list as it is treating me well.

      Reply

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