Posted on June 27, 2021
We generally steer clear of new issues. There’s enough uncertainty in the trading game to avoid adding another layer of instability to the process of trade selection.
And yet, there are times, too, when the speculative bug bites, and the rabid desire to throw money at a security with little to no trading history becomes overwhelming.
That’s precisely what happened this week, when we stared into the fleshy abyss represented by the chart of The Beauty Health Company (NASDAQ:SKIN), an outfit that sprung to life just last November.
The company is a big zero fundamentally, even though it possesses a market cap of $2.2 billion.
All told, there’s very little here to chew on.
And we say, “Great! Bring it on!”
But it sounds more like hype.
There’s so much hilarity stuffed into this bit of ballshort that we have no sense of where to start unpacking it.
So we won’t.
Consider it offered without comment.
You’ll have a hard time convincing us they aren’t just carpetbaggers.
But soon enough they’ll get figured out.
It may even happen in the next few weeks.
Now take a look at the chart –
Both of which make for a perfectly tradable speculative opportunity.
And we’re structuring it like this –
A Jew and His Money recommends you consider selling the July 16th 17.50/20.00 CALL spread* for a credit of $0.50 (0.75/0.25), and buying the July 16th 17.50 PUT for $0.85. Total debit on the affair is $0.35.
Rationale: the trade is speculative because there’s less than three weeks remaining until expiry.
That said, it costs a mere $0.35 to play (though you can purchase multiple units, should you please) and breakeven arrives at $17.15 – a mere 2.8% below Friday’s close.
Theoretically, your profits are unlimited.
While your maximum loss is limited to $2.85 (spread between the two CALL strikes plus initial debit).
We’ll look to close out on any weakness before expiry.
Good Jews and Noahides!
The Holy One Blessed Be He is the True Judge.
He doesn’t play games.
Get it right.
With kind regards,
Hugh L. O’Haynew