I like these guys but they are getting sold heavily on this news. They sell modular furniture and $28 is just $430M in Market Cap and they expect to make $50M this year and $70M next, which is on-par with their growth track. Let's take advantage of this silly reaction and add them to our Future Is Now Portfolio:
- Sell 5 LOVE Jan (as far as they go) $25 puts for $5 ($2,500)
- Buy 10 LOVE Jan $22.50 calls for $10.50 ($10,500)
- Sell 10 LOVE Jan $30 calls for $7 ($7,000)
That's net $1,000 on the $7,500 spread so $6,000 of upside potential if they can just hold $30.
In the Earnings Portfolio, let's:
- Sell 10 LOVE Jan $25 puts for $5 ($5,000)
- Buy 25 LOVE Jan $22.50 calls for $10.50 ($26,250)
- Sell 25 LOVE Jan $35 calls for $5.50 ($13,750)
Here we're taking a bigger position as this portfolio has more cash and is way ahead. It's net $7,500 on the $31,250 spread so we have $23,750 (316%) in upside potential – but that's for just 6 months, so very nice.