Posted on November 16, 2020
We’ve got one to close before this week’s offering.
It was opened last Thursday in a communiqué entitled “It’s not the people who vote that count. It’s the people who count the votes.”
There, you’ll recall, we urged you to sell the GNRC November 20th 220/230 CALL spread for $4.70 and buy the GNRC November 20th 230/220 PUT spread for $5.30. Total debit on the trade was $0.60.
The short CALL spread is worth $2.45 (3.00/0.55) and the long PUT spread is fetching $6.50 (14.00/7.50).
Buy back the first* and sell off the second**, and you pull in $4.05 on $0.60 laid out.
And that’s a very quaint 575% in just four days!
* Buy back the short 220 CALL and sell the long 230 CALL.
** Sell the long 230 PUT and buy back the short 220 PUT.
You’re welcome to try your luck by waiting until the end of the week – it’s possible you’ll see the stock cheaper. And that would definitely increase your winnings.
But then again, it might not happen…
And now for this week’s effort.
We’re getting slippery with a trade on the WD40 Company (NASDAQ:WDFC), whose lubricated rise of late appears to be losing its grip.
WDFC shares popped nearly 20% in a single session in late October, after an earnings beat that, in retrospect, may have been more grease than meat.
Do-it-yourself fix-ups during the Batflu (and a lot of kids’ bike chains, apparently) were said to be the reason for the boost in sales.
But that’s a bit hard to swallow.
Fundamentally, too, the stock looks rusty.
To wit –
In short, this is not a growth story, nor can the “isolation renovation” trend – as their CEO calls it – be expected to continue.
It was a one-off. The follow through is over. And the shpritz is about to spittle.
Breakeven is 260.20 (again, current price is $260.03).
With kind regards,
Hugh L. O’Haynew