From our chat room:
HBI/Rexx – Good one down here – I never noticed. I like them so much with $2 in earnings on $22.50 shares that I want to add them to the LTP:
For the LTP:
- Sell 10 HBI 2019 $20 puts for $3 ($3,000)
- Buy 10 2019 $18 calls for $6.20 ($6,200)
- Sell 10 2019 $23 calls for $3.80 ($3,800)
That's a net $600 credit on the $5,000 spread that's $90% in the money to start! Obligation is, of course, to own 1,000 shares at net $19.40 but I'm very comfortable with that.
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