CROX/Stock – Insider buying doesn't matter unless it's significant.  You have to look at how many shares someone already has and see if they are adding or subtracting more than 10% of their holdings.  Even then it could be just normal diversification if that's a significan chunk of their wealth in one place.  Most insider buying is theatrical, although sometime a stock is just stupidly cheap but if they "know something" then it's illegal to buy ahead of the public.  That's why Buffett announces his support prices at each meeting – no surprises. 

We decided CROX was too cheap.

February 16th, 2022 at 1:54 pm | (Unlocked) | Permalink

CROX/8800 – Been a while since we played them.  They are a $6Bn company now – that's crazy!  Making about $550M a year so $6Bn is very fair but they sold off anyway.  I think they gave too good guidance and expectations were too high but nothing wrong with them.  Still, I'd let them find a bottom but this is a good entry point.

 

At the moment, we can:

• Sell 10 CROX 2024 $65 puts for $12 ($12,000) to net in for $53 – about half the current price.  
• Buy 10 2024 $75 calls for $40 ($40,000) 
• Sell 10 2024 $125 calls for $21 ($21,000) 

That would be net $7,000 on the $50,000 spread that's $20,000 in the money – so a good place to start.  Let's add that to the Earnings Portfolio, which has plenty of cash.

Also, in the LTP, let's sell 10 of those 2024 $65 puts for $12 – because who doesn't like $12,000?  

February 17th, 2022 at 11:55 am | (Unlocked) | Permalink 

CROX/8800 – I feel more comfortable at $65.  When something changes and a large investor decides to get out – it can take them a while to unwind and pressure stays on the stock.  CROX turns 2M shares a day, so $200M and they have a $5.2Bn valuation so, if 10% of the people want out, it will take them a week to unwind, at least.  That's part of the logic of the 5% Rule – it let's us see when that pressure is rising or falling. 

February 18th, 2022 at 1:52 pm | (Unlocked) | Permalink

CROX/8800 – So far, it looks like someone huge is dumping until -$20, then pausing…  May not stop here.  

So now we check the 2024 $75 calls and they are $30 and the $65 calls are $34 and we're not going to regret that so, in the Earnings Portfolio, let's roll the 10 CROX 2024 $75 calls down to the $65 calls for net $4 ($4,000) and that puts us in for $11,000 and we're $17,500 in the money on what is now a $60,000 spread.  

Usually $3.50 is about as low as the $10 rolls get so $4 is great.  The $55s are currently $39 and we have no need to make that but, if they drop down to $34, then we could do the roll ($4,000) and double down on the $55s ($34,000) and sell 10 of the 2024 $80 calls, which are now $29, maybe for $24 ($24,000) and we would have spent net +$9,000 to be in 20 of the 2024 $55 calls covered by 10 of the $80s and 10 of the $125s – all in for $20,000 with $50,000 paid at $80 – still not bad, right?  

Of course when we initiate a bet – we try to get away with spending no money and making a fortune and, sometimes, that works out but, when it doesn't – we can't be afraid to make a proper investment.  

Cutting/Yodi – Yes, enjoy those gas bills!