Bull call spread.

music selection:  “Freak” — Days Of The New

weigh-in:  191.4 +1.6

I like the chart for Hostess (TWNK).  I am a little concerned labor might strike, emboldened by what happened at Nabisco but I’m only taking a chance on about 5,000 dollars.  With shares trading at 18.72, I bought the 15/17.5 bull call spread with 19NOV2021 expiry for 2.15 a share (24 spreads).  I put 5,160 in capital at risk over 40 days.  The spread enjoys an impressive 8.39% downside protection to breakeven.  Unfortunately, being that deep in the money hurts profitability.  Should the spread finish in the money, the full profit will be 840 dollars, which is good for 16.3% or 149% annualized.

With five days left in my October expiries, three out of four spreads are threatened.  LSI is hopeless and will be a total loss. I’m holding out on Amazon and ST Micro.  This will probably be a losing month.

Devour your prey raptors!

Bull spread Hostess (TWNK) with yield up to 149%

Never miss another opportunity to devour prey!

One thought on “Bull spread Hostess (TWNK) with yield up to 149%

  • October 11, 2021 at 4:04 pm
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    With the Fed poised to withdraw QE imminently, supply constraints, and interest rate hikes on the agenda for next year, it might be a good time to switch from bull spreads to double-sided plays like short condors, long strangles, etc. Either inflation is actually transitory, and the economy continues to melt up as 2021 stimulus money works through the system, supply chains are fixed, and the COVID threat pushes back the Fed’s timeline, ***OR*** inflation persists as supply chain issues are not resolved in time for the holidays, the Fed starts QT this quarter, the infrastructure bill absolutely fails, or COVID numbers hit previously unseen levels around the holidays, prompting lockdowns amid retail disappointment. We’ll go one way or another, but IMO a flat stock market is the thing to bet against. Retailers seem like the natural Target ;).

    Reply

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