Project 250k: Starting up (First trade: WD-40)

WD-40 (NASDAQ:WDFC) should handily beat earnings estimates and rise quite a bit this earnings season. Overall, I don’t see this stock going anywhere in the next year or two, but I do not think they will go down neither. Little hype is built into their earnings release and while I don’t think they’ll hit another all-time low, I do think they will rally quite a bit on stronger sales and increased year-over-year profits.

I think the $110 puts expiring on July 21th, 2017 are priced very competitively, assuming I can get volume on them. However, given the low open interest, it is far more likely that I will sell $105 puts instead, for which I am hoping to receive $1.45-$1.5 per contract. Given that I want to place $15,000 in that trade, this would imply selling roughly 100 contracts, which is well above the normal option’s volume, but not impossible to grab.

If I do manage to get this trade in and everything goes well, aka WD-40 closes above $105 on Friday, July 21th, 2017, I will earn a grand total of $15,000.

If I cannot get the volume I want, I might also sell some $100 August puts. Given its small size ($1.54B), WD-40 has little option activity, which complicates the trade. For this reason, I might also simply buy the stock and resell the day after earnings.

WDFC is undervalued right now and I think the pullback in recent months was an opportunity to buy in. I think they rise post-earnings, but given the low volume and high spread, I would not necessarily recommend buying calls.

WD-40 reports its earnings on Monday, July 10th, 2017, after market closes.

This is my public trade as part of Project 250k. Patrons get access to all my trades for this project, which this week includes PepsiCo, Delta Airlines, JP Morgan and so on.

Overall, the post-Independance Day earnings say starts off slowly with only a handful of interesting earnings, but things quickly pick up after that.

Please note that selling puts like I do carry an immense amount of risk. DO NOT copy this trade unless you are ready to accept that massive risk. When you sell puts, you can lose many times your invested amount. I am only sharing my trades with you as part of Project 250k, I will not take any responsibility for any loss you incur as part of your trading. Please be aware that last earnings season, WD-40 fell from $119 to $100. If a $19 drop happened to this, I would lose well over $50,000 on this trade.

 

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