SOFI is trading at 30x current earnings and 17.8x forward so close to 100% earnings growth means $14.50 is still stupidly cheap but it also means even a small miss on deposits or returns on deposits or default risk or a revenue miss can panic people - so you have to watch both ends.
I would sell 2028 $15 puts for $3.40 as that's net $11.60, which is a 20% discount to the current price. The 2029 $13 puts are $3.10 so there's your roll - another 15% off at no cost so, to me, that's FREE MONEY!
The 2028 $13 puts are $2.65 - not terrible but why not take the extra $1 every 15 months if you are going to be a long-term investor?
Then a bull call spread is what we can get away with that's not unrealistic.
If 20x is our target into next year then about $17 is our goal and the 2029 $17s are $4.60 and the $13s are $6 and the $10s are $7.40.
I'm confident enough to spend $1.40 more for being $3 more in the money so $10/17 spreads at net $3.20 means your in for net $13.20 less, let's say 50% on the put side is -$1.70 per long is now net $1.50 ($11.50) on the long end and 100% net gains of every penny above to $17 - which means you can be aggressive on the short-call selling, right?
So the extra $1.50 also buys you the ability to sell more short-term calls - that's value.
Let's say, overall, we're looking at:
-
- Sell 25 SOFI 2028 $15 puts for $3.40 ($8,500)
- Buy 50 SOFI 2029 $10 calls for $7.40 ($37,500)
- Sell 50 SOFI 2029 $17 calls for $4.60 ($23,000)
So the long end of the spread is net $6,000 on the $35,000 spread that's $22,500 in the money to start!
