Posted on November 30, 2020
This week’s effort sports a vehicular underlying, Copart Inc. (NASDAQ:CPRT), online auctioneer of cars and the like – that also sports a NASCAR set of valuations.
Price/Earnings is a funny-car 40.38,
Dividend yield is pit-stop ZERO,
Price to Book is 10.08…
And if that wasn’t enough, insiders guiding the pace car have sold 46.7% of their holdings over the last six months, for a grand total, dizzy sum of $112 million!
Since the Batflu hysteria seized the planet back in March, insider sales have amounted to a speedway record $200 million.
So, too, in the technical realm do things appear racy.
Here’s the daily chart –
Have a look now at the weekly chart, from which the timing of the trade garners further support –
And a CPRT trade on the short side.
Like this –
A Jew and His Money recommends you buy the January 15th CPRT synthetic PUT by selling the 105 CALL for $11.50 and buying the 105 PUT for $1.50. To protect against upside flight, buy the 120 CALL for $2.80. Total credit on the trade is $7.20.
Rationale: CPRT looks poised for a fall, and we’ve structured a trade that allows for full downside exposure, while capping our losses if we’re wrong.
$112.20 is our breakeven (2.6% below the current price of $115.21).
Maximum gain on the trade is unlimited.
Maximum loss – if CPRT closes above 120 – is $7.80.
With kind regards,
Hugh L. O’Haynew