Found another good one for the LTP, Big Lots (BIG) is doing well at $69 but that's still only $2.5Bn and they made $629M last year and should normalize going forward at $200M but $200M is fine for $2.5Bn. The bonus money came from selling off distribution centers last year but, going forward, they are just a nice, little business. Debt is $50M and $550M in cash so really it's more like a $2Bn net of cash valuation on $200M in earnings - I love that.
I'm sorry we missed them when they were down but should be fun to play and we don't mind owning them for $40 so, in the LTP:
- Sell 10 BIG 2023 $40 puts for $6 ($6,000)
- Buy 15 BIG 2023 $45 calls for $30 ($45,000)
- Sell 15 BIG 2023 $65 calls for $20 ($30,000)
- Sell 5 BIG July $75 calls for $4.75 ($2,375)
That's net $6,625 on the $30,000 spread so $23,375 (352%) of upside potential at $65 is already in the money and, if we can sell 6 more out of the money calls for $2,000+, we'd be into a net credit on the trade without even trying. Worst-case is we end up owning 1,000 shares at around $40 (depending on sales), which is 42% below the current price - that's a downside we can live with!
TDA/Snow - Well of course they are going to SAY that but they sure don't act like it the way they are treating their clients.
