WTW is a fun bet as they come back over $10:
Strong guidance and new Oprah campaign sends Weight Watchers higher
- Shares of Weight Watchers (NYSE:WTW) are on the move after the company topped Q3 EPS estimates on 3% sales growth.
- The company reports a 10% Y/Y increase in subscribers to 2.8M at the end of the quarter
- Management expects a new campaign featuring Oprah Winfrey that launches this winter to be a sales driver. The company also set full-year EPS guidance at $0.95-$1.05 vs. $0.94 consensus.
- Previously: Weight Watchers beats by $0.08, misses on revenue (Nov. 3)
- WTW +8.90% premarket to $10.89.
Let's add them to the OOP as follows:
- Sell 5 2018 $10 puts for $3 ($1,500)
- Buy 15 April $10 calls at $1.80 ($2,700)
- Sell 15 April $12 calls for $1 ($1,500)
That's a net $300 credit on the $3,000 spread that's $1,000 in the money to start you off. Upside potential is $3,300 back at $12 in April and, if WTW stays over $10 to the end of the year, we're talking 1,100% gains on cash. ToS says the ordinary margin requirement is just $1,800, so pretty efficient.
Oprah, of course, is a big celebrity and I'm sure she's doing the promo either for free (she's a major holder) or low-cost and that's free money that doesn't show up on the books. On top of that, they are showing good progress in their turnaround strategy so worth a chance with the worst-case being owning 500 shares at $10 ($5,000). Very low risk for a nice reward – that's what the OOP is all about!
LABU flying already but early innings in the recovery:
Coffee going in leaps and bounds:
/RB/Craigs – I'm regretting my cruise next week at this point. Resigned to stick it out for the long haul now. I think this is all a reaction to the news of the pipeline coming back and people are unwinding longs they stupidly took earlier in the week – hopefully the final capitulation of those contracts.
Dollar/Lunar – 97 is where we do want to take a poke long again.
