PSW Top Trade Update – Jan 31 2025 – Bank OZK (OZK) Adjustment

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Well that was fast!  

We put out a Top Trade Alert on Jan 15th for OZK and it was a bit aggressive as we planned to sell short-term calls after it popped:  

OZK is a nice regional bank at $45, which is $5Bn and they are making $660M so 7.5x is very nice with nice growth too. Also, very interesting for a bank is $1.6Bn in CASH!!! net of debt – that’s crazy! This one should go into the LTP as follows:

      • Sell 10 OZK 2027 $45 puts for $7.50 ($7,500)
      • Buy 20 OZK 2027 $35 calls for $13.75 ($27,500)
      • Sell 17 OZK 2027 $50 calls for $6 ($10,200)

That’s net $9,800 on the $30,000+ spread that’s $20,000 in the money to start with a high-enough degree of confidence that I’ll make this a Top Trade Alert. Upside potential is $20,200+ (206%) and we’ll start selling 5 short calls at about $50. At the moment, the April $45 calls are $3.25 so 5 short would fetch $1,625 (16.5%) for the quarter so, if we can sell the $50s for that price – that’s a no-brainer. 

Finviz Chart

After earnings the gains continued and the stock is already over our goal of $50 and the short puts are $5.30 ($5,300) and the $35 ($18.50)/50 ($9.50) spread is net $20,850 so net net $15,550 on the spread is up $5,750 (58.6%) in just two weeks and well on our way to $30,000 for another $14,450 (92.9%) of potential gains from here – but that’s just the spread!

By following through with our plan and now selling 5 April $50 calls for $3.50 (better than we expected), we put $1,750 in our pocket, which is like paying ourselves a 17.8% dividend on our $9,800 initial investment using just 76 of the 714 days we have to sell.  

If we just consistently collect $1,500 per quarter for the next 7 quarters while we wait for our 92.9% return against the current balance, we can make a bonus $10,500, which is ANOTHER 100%+ of our original investment. Aren’t options fun?!?

Of course, not every sale will go perfectly and that’s why we’re doing these updates – to get you used to the BUSINESS of trading – a business where we will teach you to CONSISTENTLY make money using these simple options techniques over time and take control of your portfolio.

See you at the next update (April), 

    • Phil
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