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Top Trades for Tue, 16 Jan 2018 14:39 – HRB

Wow, and down we go.  

No particular reason – just the whole move up was BS…

Good reason to go long (HRB), who I like anyway:

  • H&R Block (HRB +1.2%) breaks higher after the company announces that it will be the "exclusive DIY" desktop tax software provider at Walmart stores.
  • "In addition to better prices, the value H&R Block can offer Walmart shoppers with our support features, such as free in-person audit representation and unlimited free tax advice, is among the many reasons we are so pleased to expand our partnership with Walmart this year," says H&R digital manager Heather Watts.

They are very reasonably priced at $26.65 and they do pay a 3.6% dividend so I really don't mind owning them long-term. 

In the OOP:

  • Sell 5 2020 $25 puts for $4 ($2,000) 
  • Buy 10 2019 $22 calls for $6.20 ($6,200)
  • Sell 10 2019 $27 calls for $3.40 ($3,400) 

That's net $800 on the $5,000 spread that's almost entirely in the money already.  If HRB squeaks up from here, we make $4,200 (525%) but we will still have the open short puts for another year but, again, I'm very happy to own HRB at $25.

For the LTP: 

  • Sell 10 2020 $25 puts for $4 ($4,000) 
  • Buy 20 2019 $22 calls for $6.20 ($12,400)
  • Sell 20 2019 $27 calls for $3.40 ($6,800) 

So just doubling the OOP with an $8,400 (525%) upside on $1,600.   Nice boring way to make 5x I think! 


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