SPWR/Pman – Got to check our portfolios in case we need more cowbell!
Future is Now:
| SPWR Long Call | 2023 20-JAN 20.00 CALL [SPWR @ $32.82 $0.25] | 50 | 5/21/2021 | (443) | $43,500 | $8.70 | $6.40 | $8.70 | $15.10 | $0.19 | $32,000 | 73.6% | $75,500 | ||
| SPWR Short Call | 2023 20-JAN 35.00 CALL [SPWR @ $32.82 $0.25] | -50 | 5/21/2021 | (443) | $-20,600 | $4.12 | $3.56 | $7.68 | $-0.23 | $-17,775 | -86.3% | $-38,375 | |||
| SPWR Short Put | 2023 20-JAN 20.00 PUT [SPWR @ $32.82 $0.25] | -20 | 5/21/2021 | (443) | $-10,200 | $5.10 | $-2.55 | $2.55 | $-0.04 | $5,100 | 50.0% | $-5,100 |
This is a $75,000 position at net $32,025 so plenty of upside and we're almost 100% in the money. We'll sell 2024 puts when these are closer to expiration or if earnings are good enough to make them very unlikely (they kind of are already), the $25 puts are $6.25 so we'll get some nice money for those too. Actually, I can't believe you can still get $2.55 for the 2023 $20 puts – talk about free money!
LTP:
| SPWR Long Call | 2023 20-JAN 20.00 CALL [SPWR @ $32.76 $0.19] | 75 | 6/18/2021 | (443) | $75,000 | $10.00 | $5.08 | $10.00 | $15.08 | $0.16 | $38,063 | 50.8% | $113,063 | ||
| SPWR Short Call | 2023 20-JAN 35.00 CALL [SPWR @ $32.76 $0.19] | -75 | 6/18/2021 | (443) | $-37,500 | $5.00 | $2.63 | $7.63 | $-0.28 | $-19,688 | -52.5% | $-57,188 | |||
| SPWR Short Put | 2023 20-JAN 25.00 PUT [SPWR @ $32.76 $0.19] | -30 | 6/18/2021 | (443) | $-21,750 | $7.25 | $-2.80 | $4.45 | $0.05 | $8,400 | 38.6% | $-13,350 |
Here we have a $112,500 spread – essentially the same one, at net $42,525 so the upside if SPWR can make it to $35 over the next 12 months is $69,975 (164%) – not a bad ROI.
Money Talk:
| SPWR Long Call | 2023 20-JAN 15.00 CALL [SPWR @ $32.76 $0.19] | 15 | 5/11/2021 | (443) | $13,875 | $9.25 | $9.48 | $9.25 | $18.73 | – | $14,213 | 102.4% | $28,088 | ||
| SPWR Short Call | 2023 20-JAN 25.00 CALL [SPWR @ $32.76 $0.19] | -15 | 5/11/2021 | (443) | $-8,250 | $5.50 | $6.55 | $12.05 | $0.05 | $-9,825 | -119.1% | $-18,075 | |||
| SPWR Short Put | 2023 20-JAN 20.00 PUT [SPWR @ $32.76 $0.19] | -5 | 5/12/2021 | (443) | $-3,000 | $6.00 | $-3.48 | $2.53 | $-0.06 | $1,738 | 57.9% | $-1,263 |
I am sad we can't add to this (we only make changes on TV). This is a $15,000 spread that's 100% in the money at $8,750 so there's no reason to take it off but I'd add another leg if I could.
The leg I would add since the MTP is up 107% and has $167,589 out of $207,249 in cash is as follows:
- Sell 10 SPWR 2024 $25 puts for $6.25 ($6,250)
- Buy 25 SPWR 2024 $30 calls for $12 ($30,000)
- Sell 25 SPWR 2024 $40 calls for $9.25 ($23,125)
That's net $625 on the $25,000 spread so $24,375 (3,900%) upside potential at $40 and our worst case is owning 1,000 shares at $25.625/share, which is 22% below the current price. When you REALLY want the worst-case to happen – it's a good spread! This is too good not to take so let's put it in the Earnings Portfolio!
Why so aggressive on this one (usually we go a bit more in the money)? Because I like the no-cost trade ahead of earnings and it will be cheap to roll the long calls lower (the $25s are now $14.50, the $20s are $16.75) so we're just keeping the money on the side for a rainy day. If SPWR pops, we'll just have to be content making 3,900% in two years.
