The stock pretty much went straight up to $80 from there.....ouch.
But.....last quarter's results finally were less stellar than anticipated and the stock is now trading back around $55. The "pressure" to unload this position as it approached getting back to even has been "large".
However, its pe is still over 40. Further, general retail sales numbers this quarter seem to be somewhat challenged. Hence it does not seem like this stock will be bouncing back anytime before the catalyst of its next earnings call.
So instead of unloading this position now, CCI sold the July $52.50 puts for $.55. This creates a covered put situation. The inverse of the popular covered call strategy. Scenarios include:
- The stock continues its plunge this week down below $52.50 and the position will be closed at around a price of $52. "Getting out" with a modest 3% position.
- The stock levels off or rises from here, in which case we will pocket the 1% premium (over 1 week) to reduce our exposure on this trade. Then we will have to re-evaluate this position going into their earning call.