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Top Trades for Thu, 25 Oct 2018 11:47 – IP

MU/Soma, Batman - Well, at $36, the 2021 $33 puts can be sold for $6.10 so say $3,050 for 5 short and then you can buy 10 of the 2021 $25 ($16)/38 ($9.50) bull call spreads for $6.50 ($6,500) and that's net $3,450 on the $13,000 spreads that's pretty much in the money.  It's conservative but still pays $9,550 (276%) at $38.

IMAX/Jabob – I don't know what people expect from these guys.  

Imax (IMAX) came out with quarterly earnings of $0.14 per share, beating the Zacks Consensus Estimate of $0.11 per share. This compares to earnings of $0.08 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 27.27%. A quarter ago, it was expected that this entertainment technology company would post earnings of $0.25 per share when it actually produced earnings of $0.30, delivering a surprise of 20%.

Over the last four quarters, the company has surpassed consensus EPS estimates three times.

Imax, which belongs to the Zacks Film and Television Production and Distribution industry, posted revenues of $82.11 million for the quarter ended September 2018, surpassing the Zacks Consensus Estimate by 2.30%. This compares to year-ago revenues of $98.80 million. The company has topped consensus revenue estimates three times over the last four quarters.

Q4 is their big Q and they are on track to hit 0.95 for the year, which doesn't make them special at $20.50 but they are a solid growth company that tends to stay in the long-term channel, which makes them fun to play.  We got more aggressive last week, hoping earnings would get them higher but our base trade is 30 2021 $15 calls we just bought for $9 (now $7.50) and 10 short 2020 $22 puts we sold for $2.85 (now $3.30) and I have no problem waiting for them to move back to the top of the range before we cover.

We've been playing them this way for 10 years – you should be used to it by now!  

IP/Mike – People forget it's paper and packaging and paper may be in decline but I've never seen more packages with AMZN at the door every other day.  With my Prime Membership, I literally just go from the fridge to my IPad if I run out of something – not even a grocery list anymore – the items just come 2 days after we need them.  The price is the same and the poor grocery store with their overhead and employees is cut out and the packaging is a horrible environmental waste – but what can you do?

Anyway, good for IP and I don't see much growth but a steady earner with a 5% ($2) dividend makes them attractive.  

Since you can sell the 2021 $40 puts for $5.50 – let's sell 10 of those in the LTP for $5,500 and let's also pick up 15 of the 2021 $40 ($7.50)/47.50 ($4) bull call spreads for $3.50 ($5,250) so we have a $250 net credit on the $11,250 spread ($11,500 upside potential) and my real intention is to sell calls when they come back.  The Jan $50 calls are 0.35 but the $45s are $1.60 so let's say we pick up $1.50 per Q x 8 qs on 5 contracts is $6,000 more while we wait.

 

 

 


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