Conifers 2020-01-17

Last week’s conifers include a 93-bagger on the call-option side and a 23-bagger on the put-option side. Below is a table of all options bought on Jan 13th and sold on Jan 17th that returned at least 10x profit. The tickers are separated into 4 quadrants: call-options vs. put-options, and S&P 500 components vs. Other.

Call OptionsPut Options
S&P 500 Abbott Laboratories (ABT)
American Electric Power (AEP)
American Water Works (AWK)
Cardinal Health (CAH)
CarMax (KMX)
Carnival Corporation (CCL)
The Cooper Companies (COO)
Duke Energy (DUK)
Entergy (ETR)
Fox Corporation (FOXA)
The Home Depot (HD)
McKesson (MCK)
Mohawk Industries (MHK)
Morgan Stanley (MS)
PepsiCo (PEP)
Perrigo (PRGO)
Sempra Energy (SRE)
The Southern Company (SO)
TransDigm Group (TDG)
Visa (V)
YUM! Brands (YUM)
None
OtherAlcon (ALC)
The Blackstone Group (BX)
CEMEX (CX)
Dave & Buster’s (PLAY)
Entegris (ENTG)
Forty Seven (FTSV)
Ichor Holdings (ICHR)
Mallinckrodt (MNK)
Momenta Pharma (NTA)
NovoCure (NVCR)
Nutanix (NUT)
Pinterest (PINS)
Shake Shack (SHAK)
Signet Jewelers (SIG)
Sunrun (RUN)
Thor Industries (THO)
ProShares UltraShort Nat Gas (KOLD)
XBiotech (XBIT)
XPO Logistics (XPO)
Zai Lab (ZLAB)
Criteo (CRTO)
First Solar (FSLR)
MGP Ingredients (MGPI)
Sanderson Farms (SAFM)
Ubiquiti (UI)
U.S. Nat Gas Fund (UNG)

A few quick observations. There were no put-options on S&P component companies that returned at least 10x profit. I guess that means either the S&P 500 components did not drop very much, or put-options were already priced rich thereby limiting the return from out-of-the-money (OTM) options. Also I noticed natural gas ETFs showed up on both the call and put side, although the call option was for an “UltraShort” ETF. The non-S&P put-options included a few companies in biotech/pharma. I’m not going to cover all of these tickers, but let’s get into a few of them by looking at charts.

Breakup Logistics Conglomerate

XPO Logistics (XPO) announced on Wed Jan 15th that it will sell (or spin-off) 4 of its 5 business units, while retaining the short haul trucking business focused on less-than-truckload (LTL) in North America. Market speculate that one of its largest customers, Amazon, is downsizing its business with XPO. The stock was trading at $79.48 at the beginning of the week, closed the week at $94.64. There was a call-option on XPO, strike price at $85, expiring Jan 17th, available asking price of $0.10 on Jan 13th. The same option on Jan 17th had available bid price of $9.40. Assuming active trading on both sizes of the trade (taking the ask, hitting the bid), the total return was a 93x net return.

DateTickerPriceTypeExpirationStrikeAsk
2020-01-13XPO79.48Call2020-01-17850.10
DateTickerPriceTypeExpirationStrikeBid
2020-01-17XPO94.64Call2020-01-17859.40

Source: DeltaNeutral.com (HistoricalOptionData.com)

Source: Yahoo Finance

Online Holiday Jewels

Signet Jewelers (SIG) announced Thursday Jan 16th that financial results from 2019 holiday season were stronger than expected, especially from eCommerce sales growth. The stock showed the largest one-day gain in 27 years, trading at $20.19 at the beginning of the week, closed the week at $29.52. There was a call-option on SIG, strike price at $27, expiring Jan 17th, available asking price of $0.05 on Jan 13th. The same option on Jan 17th had available bid price of $2.40. Assuming active trading on both sizes of the trade (taking the ask, hitting the bid), the total return was a 47x net return.

DateTickerPriceTypeExpirationStrikeAsk
2020-01-13SIG20.19Call2020-01-17270.05
DateTickerPriceTypeExpirationStrikeBid
2020-01-17SIG29.52Call2020-01-17272.40

Source: DeltaNeutral.com (HistoricalOptionData.com)

Source: Yahoo Finance

New Activist, New Play

Large investor KKR & Co. announced on Friday Jan 17th it took a 10.7% stake (including shares and options) in Dave & Buster’s Entertainment (PLAY), and will push management for a new business strategy. The stock was trading at $41.38 at the beginning of the week, closed the week at $47.37. There was a call-option on PLAY, strike price at $45, expiring Jan 17th, available asking price of $0.05 on Jan 13th. The same option on Jan 17th had available bid price of $2.20. Assuming active trading on both sizes of the trade (taking the ask, hitting the bid), the total return was a 43x net return.

DateTickerPriceTypeExpirationStrikeAsk
2020-01-13PLAY41.38Call2020-01-17450.05
DateTickerPriceTypeExpirationStrikeBid
2020-01-17PLAY47.37Call2020-01-17452.20

Source: DeltaNeutral.com (HistoricalOptionData.com)

Source: Yahoo Finance

More Happy

PepsiCo (PEP) announced Wednesday Jan 15th that it would move to 100% renewable energy in U.S. operations by end of this year. The stock was trading at $136.53 at the beginning of the week, closed the week at $141.26. There was a call-option on PEP, strike price at $140, expiring Jan 17th, available asking price of $0.03 on Jan 13th. The same option on Jan 17th had available bid price of $1.20. Assuming active trading on both sizes of the trade (taking the ask, hitting the bid), the total return was a 39x net return.

DateTickerPriceTypeExpirationStrikeAsk
2020-01-13PEP141.26Call2020-01-171400.03
DateTickerPriceTypeExpirationStrikeBid
2020-01-17PEP141.26Call2020-01-171401.20

Source: DeltaNeutral.com (HistoricalOptionData.com)

Source: Yahoo Finance

Weak Whiskey

MGP Ingredients (MGPI) announced Friday Jan 17th that earnings guidance would be lower than previously announced, and private label whiskey sales would be significantly worse than expected. The stock was trading at $50.60 at the beginning of the week, closed the week at $38.18. There was a put-option on MGPI strike price at $50, expiring Jan 17th, available asking price of $0.45 on Jan 13th. The same option on Jan 17th had available bid price of $11.20. Assuming active trading on both sizes of the trade (taking the ask, hitting the bid), the total return was a 23.9x net return.

DateTickerPriceTypeExpirationStrikeAsk
2020-01-13MGPI50.60Call2020-01-17500.03
DateTickerPriceTypeExpirationStrikeBid
2020-01-17MGPI38.18Call2020-01-17501.20

Source: DeltaNeutral.com (HistoricalOptionData.com)

Source: Yahoo Finance

Cookies All Gone

Shares of French ad-tech company Criteo (CRTO) crashed to a 52-week low when Google announced it would end support for third-party cookies in its Chrome browser within 2 years. Google’s announcement follows similar policies by Apple’s Safari browser and Mozilla’s Firefox browser. These moves are driven by the European Union’s GDPR and user privacy preferences. The stock was trading at $18.17 at the beginning of the week, closed the week at $14.02. There was a put-option on CRTO strike price at $17.50, expiring Jan 17th, available asking price of $0.15 on Jan 13th. The same option on Jan 17th had available bid price of $3.40. Assuming active trading on both sizes of the trade (taking the ask, hitting the bid), the total return was a 21.7x net return.

DateTickerPriceTypeExpirationStrikeAsk
2020-01-13CRTO18.17Call2020-01-1717.500.15
DateTickerPriceTypeExpirationStrikeBid
2020-01-17CRTO14.02Call2020-01-1717.503.40

Source: DeltaNeutral.com (HistoricalOptionData.com)

Source: Yahoo Finance

Network Downgrade

Ubiquiti (UI), a wireless networking technology company, traded lower when Credit Suisse downgraded the stock on Wednesday Jan 15th from Neutral to Underperform, with a new price target of $134. The stock was trading at $187.85 at the beginning of the week, closed the week at $170.58. There was a put-option on UI strike price at $180, expiring Jan 17th, available asking price of $0.55 on Jan 13th. The same option on Jan 17th had available bid price of $9. Assuming active trading on both sizes of the trade (taking the ask, hitting the bid), the total return was a 15.4x net return.

DateTickerPriceTypeExpirationStrikeAsk
2020-01-13UI187.85Call2020-01-171800.55
DateTickerPriceTypeExpirationStrikeBid
2020-01-17UI170.58Call2020-01-171809.00

Source: DeltaNeutral.com (HistoricalOptionData.com)

Source: Yahoo Finance

Development Sunblock

First Solar (FSLR), a manufacturer of solar panels, was downgraded by Barclays on Wednesday Jan 15th from Overweight to Underweight, with a price target changed to $49 from $66. The stock was trading at $57.44 at the beginning of the week, closed the week at $53.52. There was a put-option on FSLR strike price at $54.50, expiring Jan 17th, available asking price of $0.08 on Jan 13th. The same option on Jan 17th had available bid price of $0.93. Assuming active trading on both sizes of the trade (taking the ask, hitting the bid), the total return was a 10.66x net return.

DateTickerPriceTypeExpirationStrikeAsk
2020-01-13FSLR57.44Call2020-01-1754.500.08
DateTickerPriceTypeExpirationStrikeBid
2020-01-17FSLR53.52Call2020-01-1754.500.93

Source: DeltaNeutral.com (HistoricalOptionData.com)

Source: Yahoo Finance

More Calls on S&P 500 Names

TickerTypeExpirationStrikeAsk (1/13)Bid (1/17)Return
TDGCall2020-01-176200.3515.1042.1x
SRECall2020-01-171550.052.0540x
SOCall2020-01-17660.041.2229.5x
MHKCall2020-01-171350.154.5029x
VCall2020-01-17202.50.071.8225x

More Calls on Other Names

TickerTypeExpirationStrikeAsk (1/13)Bid (1/17)Return
SHAKCall2020-01-1767.50.052.1542x
ICHRCall2020-01-17350.103.5034x
PINSCall2020-01-1721.50.051.4027x
ALCCall2020-01-17600.051.3025x
ZLABCall2020-01-17500.102.3522.5x

More Puts on Other Names

TickerTypeExpirationStrikeAsk (1/13)Bid (1/17)Return
SAFMCall2020-01-171650.355.4014.4x
UNGCall2020-01-17160.040.4510.3x

Conifer Observations

Continuing to track calls and puts with over 10x returns in a given week. I’m starting to notice some commonalities in expirations, greeks, volume, and open interest. Fascinating to see there are opportunities at various weekly time periods. Stay tuned, I’ll keep writing about them.

Disclosure: This article is not a recommendation. Investors should make their own determination of whether or not to buy or sell stocks or options based upon their specific investment goals, and in consultation with their financial advisor.