Also in the Future is Now Portfolio, LOVE is getting no love despite a nice earnings beat because margins were lower. Unforgiving investors are an opportunity for us as 0.45 in Q2 after making 0.12 in Q1 (when they were expected to lose 0.20). That’s 4 beats in a row for them.
No reason to think they won’t hit goal of $47M for the year and they project $66M next year but $27.50 is just $450M – so not even 10x earnings. Not even any net debt – they have $64M in CASH!!!
In the FIN Portfolio, we have 10 Jan $22.50/30 bull call spreads and 5 short Jan $25 puts we bought on June 8th for net $1,450 so our break-even is $23.95 (ignoring the short puts) – so we’re in very good shape. That spread is at net $1,825 now, so still in very good shape considering it’s $5,000 in the money.
When they are giving money away – it’s a good idea to take it!
Options still only go out to April but better than Jan so, as a new trade in the Earnings Portfolio, let’s:
- Sell 10 LOVE April $25 puts for $5 ($5,000)
- Buy 20 LOVE April $20 calls for $11 ($22,000)
- Sell 20 LOVE April $25 calls for $8 ($16,000)
That’s a net $1,000 on the $10,000 spread with an upside potential of $9,000 (900%) in 225 days if LOVE simply manages to hold $25 and our worst case is owning 1,000 shares at net $26, which is still below the current price.