Skip to main content

A Coca-Cola Call Option

After a strong push with their World Cup marketing scheme and essentially doubling their growth in Africa and Asia, Coke looks poised for a nice run. The fundamentals and dividend yield are both strong and Brian has a simple trade to gain more leverage to the upside. His play is the Sept.55 call, you pay $1.80 so your break even point is $56.80, above that you start to participate as if you are long stock. Below 55 you have no more risk other than the $1.80 you paid for the trade. Brian feels Coke is at an inflection point where it may move significantly higher, possibly 10% or more in the next year.

Coca-Cola Trade

Comments

Post a Comment

Popular posts from this blog

Morning Update

Yesterday JC Penny reported what some are calling “The Worst Quarter in the History of Retail.” The company reported a quarterly loss of $2.51 per shares and that revenue dropped 24.8%. Revenue at stores open for at least a year fell 31.7% and customer traffic dropped 17% last quarter following a 10% decrease in third quarter. Not surprisingly these dismal numbers spurred option traders to make some large bearish bets on the stock. The biggest was the purchase of 30,000 May 16 puts for $1.57 with the stock at 17.50. This trade will be profitable if JCP is below 14.43, 17.5% lower, by May expiration. One of the biggest concerns investors should have in JC Penny’s cash supply. In November they told investors that they would end the year with $1 billion in cash, but ended up with only $930 million. Wednesday they then told investors that they had delayed $85 million in payments to their suppliers until the early part of the first quarter. This is another red flag that the company is run...
Post a Comment
Read more