We are going back to the well on an old favorite, Walgreens (WBA) as they are now too cheap to resist:
WBA/Coulter - I love them down here. We already have them.
Submitted on 2020/01/08 at 10:33 amWBA/Winston – I think this might be a chance for us to add them in the new portfolios. The "disappointment" is $1.37/share vs $1.41 expected though 2020 guidance remains at $5.93 per $55 share with Retail Pharmacy Sales up 1.6%. Though Gross Profit is down 5.2% from last year in a tougher environment, it's already been offset by cost savings so Net Profit is overall flat.
I think $60 is the right target for WBA so we'll let them find a floor and then make a post-earnings play though I'm keeping an eye on the 2022 $50 puts as they are almost $6 for a net $44 entry, which would put the p/e below 8.
WBA definitely belongs back in the LTP so let's:
- Sell 10 WBA 2022 $45 puts for $7 ($7,000)
- Buy 20 WBA 2022 $40 calls for $9.65 ($19,300)
- Sell 10 WBA 2022 $55 calls for $4.50 ($4,500)
That's net $7,800 on the $30,000 spread so the upside is $22,200 (284%) but lots of room to sell calls on a bounce or, if things do get worse, we can sell more calls and roll the $40s lower. Lots of options.
Untradeable/Bert - Best to watch and wait on a bounce day like this. I know it feels like we're missing out but so many times these are just head-fakes.
A lot of volume today (174M) but only 1/2 of Friday so don't want to read too much into the bounce.
