Simply Irresistible

By Paul Price of Market Shadows

I added two new put positions today, selling puts in these high quality, old favorites: Bed Bath & Beyond (BBBY) and Coach (COH). These two are too cheap to resist for put writing purposes.

We sold two contracts of the BBBY Jan. 2016, $60 strike price puts @ $6.40 per share for our Virtual Put Writing Portfolio.

BBBY  Jan. 2016  $60 Puts

 

Break-even on this new BBBY trade becomes $53.60 ($60 strike price – $6.40 put premium). That is below the absolute low prices touched in all of 2012, 2013 and 2014 YTD. Sales, earnings and cash flow have been rising even as the share price has been regressing.

 

BBBY Jan. 1, 2012 - Apr. 29, 2014

 

Coach shares got crushed yesterday after reporting better than expected March quarter results. Today’s further dip into the $44’s made selling a pair of new LEAP puts irresistible. We added two contracts of the Jan. 2016, $45 strike price puts @ $7.40 per share.

 

COH Jan. 2016  $45 Put as of Apr. 30, 2016

 

The ‘If Put’ price drops all the way down to $37.60 ($45 strike price – $7.40 put premium). As with BBBY, that net ‘if exercised’ price is beneath all recent years’ actual lows. With Coach, the ‘If Put’ price has not been seen since 2010.

 

COH  Jan. 1, 2012 - Apr. 29, 2014

Follow all Market Shadows’s closed-out and current option trades by clicking here Virtual Put Writing Portfolio.

For a fuller discussion of Coach’s prospects click on the link below

The only positive take you are likely to see on Coach this week.

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Comments

  1. Thanks for the article and trade recommendations.
    Any other readers follow this trade?

  2. stephane says:

    Hi Paul,
    Have you taken a look at ESRX this morning?
    Any thoughts on that one?

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