18.1 C
New York
Monday, April 29, 2024

Top Trades for Thu, 22 Jul 2021 13:00 – HBI

0
Top Trades for Thu, 22 Jul 2021 13:00 – HBI
psw-placeholder

HBI/Batman – Glad you pointed them out as they got cheap enough to add back to the LTP:

  • Sell 20 HBI 2023 $17 puts for $3.10 ($6,200)
  • Buy 40 HBI 2023 $15 calls for $4.50 ($18,000) 
  • Sell 40 HBI 2023 $20 calls for $2.25 ($9,000)

That's net $2,800 on the $20,000 spread that's $12,000 in the money to start (aren't options fun?).  Upside potential at $20 in 18 months is $17,200 (614%) and worst case is we own 2,000 shares at $17 ($34,000) + $2,800 if we lose that so $36,800/2,000 = $18.40/share – around the current price – so this is considered aggressive but not really as the LTP has $100,000 allocation blocks and this would only be a 1/3 entry. 

Let's say HBI drops to $8 in some disaster – we could spend $16,000 more and our basis would be $13.20 and then we could sell $15 LEAPS for $3 and that's $10.20 and sell some $8 puts for maybe $1.50 and the net becomes $8.70 on 4,000 shares and that's STILL $34,800 with the obligation to buy 4,000 more at $8 ($32,000) and we'd be in 8,000 shares at an average of $8.35 for $64,800 – STILL barely over half an allocation block! 

So, if you don't REALLY want to own 8,000 shares of HBI at $8.35, don't sell 20 $17 puts for $3.10 but, if you consider that a position you WISH you could get – then this whole trade is a no-brainer.

TOS/Rperi – Wow, that would be great!  A lot of us have been very vocal with TD about how much better TOS is – I guess they finally agreed.