There's a rumor (probably false) that GME may buy BBY.
My note to Members was:
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- GME valued at $10Bn at $22.66 with $4.2Bn in revenues (declining) and $42M in profits (declining).
- BBY $12.6Bn (too cheap) with $41Bn in revenues (growing) and $1.4Bn in profits (growing)
- Buying out BBY would be a poison pill for GME as their 10% margins would drop to 3% and having the idiots who run GME in charge of BBY would be a total disaster.
Still, BBY is a stock we were watching and something like this can be a catalyst that causes people to look at them again and we don't want them to get away from us so, in the LTP, we are adding them:
Well that sucks as we just chopped BBY from the LTP but that doesn’t prohibit us from getting back in:
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- Sell 10 BBY 2028 $75 puts for $20 ($20,0000
- Buy 25 BBY 2028 $60 calls for $14 ($35,000)
- Sell 20 BBY 2028 $80 calls for $7 ($14,000)
- Sell 7 BBY June $65 calls for $5.50 ($3,850)
- Sell 5 BBY June $65 puts for $6.25 ($3,125)
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That’s a net CREDIT of $5,975 on the $50,000 spread so we have $55,975 (936%) upside potential and 6 more quarters to sell $7,000 is another $42,000 (700%) potential premium sales – you can see why I like this one!
Note the aggressive sale of the short $75 puts. The net is only $55 if assigned so that’s fine as it’s below 10x and IF BBBY gets bought – then they cancel early and it’s a huge gift for us. You can do that with stocks you ABSOLUTELY want to own and don’t mind doubling down on.
In this case, we have a credit so let’s say we get assigned 1,000 shares and the stock fell 40%, from $63 to $37.50.
