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Faster Than a Speeding Pullet (WING/KO)

Posted on April 29, 2020

Our eldest daughter, Gnocchi, recently informed us that it’s become her life’s mission to have as many near-death experiences as possible.

When we explained to her that this was neither appropriate nor becoming a girl possessed of her intelligence and charm, she snapped back that just as her father had made a mess of his life in the manner of his choosing, so, too, was she entitled to do the same…

Now, we admit, that threw us, and not knowing quite how to respond, we simply asserted that she’d been warped by distortions created by the recent installation of a 5G antenna network in our fair Walatkaville.

Warped by Distortions…

It turns out that may have done the trick, as the rest of the day we heard her repeat the phrase under her breath, and when dinner finally rolled around, she’d taken a new tack, inquiring after the qualifications and pre-requisites needed to become a mid-level bank manager.

The ‘warped by distortion’ theme is one that pervades markets these days – if it’s even fair to call them markets anymore.

And one of the places it surfaced recently was in the fast/junk food sector, where stock in a particular purveyor of dirty-winged-fowl-laced-with-hormones-and-antibiotics has recently taken flight.

The company refers to itself as Wingstop (NASDAQ:WING), and speaking of near death experiences, its menu offers both ‘saucy’ and ‘dry rub’ flavors.

Great G-d in Heaven, What Have We Come to!?

Dry rub, eh…?

Care to give it a go?

Oh my…!

Wingspit trades with a poultrified P/E of 167 (!), has a negative Book Value and offers an annual yield of just 0.38%.

Call it fundamentally challenged.

More than that, company insiders have sold a fulsome 35% of their holdings over the last six months.

Hmmm…

Do you smell a rotten egg…?

As the chart below shows, WING stock has soared by 170% over the past 30 trading sessions, clucking from a $44 low in mid-March to its all-time high of $120 today.

Many happy returns,

Matt McAbby

 

5 responses to “Faster Than a Speeding Pullet (WING/KO)”

  1. Jim Rodgers says:

    Hate to ask it, but gonna anyway! Is that $ 5.00 max loss on the whole trade or $ 5.00 x 100 share or $500 per contract?
    Thanks,
    Jim

  2. Matt McAbby says:

    Jimmy boy!
    Always good to hear from you — and never be shy about asking.
    We have the most intelligent subscriber base PRECISELY because we ask the questions others are too timid to voice.
    And the answer is —
    IF you placed the trade with all three legs as we laid it out, AND you achieved ZERO PREMIUM (i.e. the short CALL spread paid for the long KO CALLs), then the most you can lose on the whole affair is $5.00 (500 bucks).
    If you double the recipe and set TWO short WING spreads against TEN long KO CALLs, your maximum loss for the entire venture would be twice that amount — $10.00 (a thousand bucks).
    And so on.
    That said, if the trade is NOT a zero sum affair, i.e., you achieve a credit or debit in the amount of ‘X’, then your max loss will be slightly bigger (by the size of the initial debit, X), or slightly smaller (by the size of the initial credit, X).
    Hope that helps, Jim.
    Write us back if you need clarification or anything else comes up.
    And best of luck getting it on.
    Take care,
    Matt

  3. M T says:

    I’m in for the chicken, er, leg of this one.

    If I close my eyes and inhale deeply I can still smell three full fryers bubbling behind me on wing night. 7.25 an hour and all the chicken I could eat!

  4. Matt McAbby says:

    Big MT,
    Those were the days, brother…
    Trans fat heaven.
    Hell, I’ll meet you over at St Hubert’s in Nepean in half an hour!
    Matty

  5. M T says:

    Hell yeah – those cardboard buns, the dipping sauce oh my!

    Vanity plate spotted in the parking lot of the St. Laurent franchise: “Poulet”.

    You can’t make this stuff up!

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