In the recent letter to its shareholders, Guess? is planning to highlight some some topics like its successful transformation strategy, improved and financial results, and so on. In total, Guess? seems to be a good example of a successful business transformation. And yes, the accusations against co-founder Paul Marciano will probably have a discounting effect on the market value of the shares. But as option trader as usually short-term oriented and at this moment we see a drive in price increases, we could take this chance on another options trade. So let’s check it out!
Disclaimer:
The information I am giving you in this article is for informative purposes only and should not be treated as investment advice. The information presented would not be suitable for investors who are not familiar with exchange traded options. Any readers interested in trading activities related to the information in this article should do their own research and seek advice from a licensed financial adviser.
Type of a trade: Cash secured put
Alternatively: Bull put spread
Expiration: 17th June (59 days)
Strike: $24
Premium for 1 option: between $200 and $220 on the day this article was published
Margin: apprx. $480 on the day this article was published (Please keep in mind: the margin size depends on your account size. The smaller your account size the higher the margin requirements. The margin I’m publishing here is the margin based on my account size. Therefore, it could also happen that with a small account, you would see a margin of more than $2000)
Pros for this trade:
– Based on the signal I get (ADX-Indicator), the price should continue to move at least sideways and to stay above the strike so we can get rid of the put option when the time is right
– Good fundamentals could support the price of this stock and keep it above the strike
– A decent dividend of 3.86% on the day the trade idea was published, in case the price would fall below the strike and you would get the stock assigned (Source: finviz.com)
– Moderate Fear & Gear index of 44 reduces the risk of a crash in the next weeks which could be supportive for the price
Cons for this trade:
– An IV Rank of around 18 and an IV Percentile of around 21% are playing against option sellers
– Uncertainties caused by the recent war events in the Ukraine
– Accusations against the co-founder could push the price of the stock down at the unfavorable moment
– The main con: As trading with options is also a dealing with probabilities, every of my assumptions could turn out as a wrong estimation so at the end the stock would land in the money
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Result of this trade: t.b.a
Realized profit for 1 option: t.b.a
Days in the trade: t.b.a
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