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Raven Industries Inc. Message Board

  • skiplarson98 skiplarson98 Jul 2, 2012 3:57 PM Flag

    Options on RAVN

    Just happened to notice that someone has begun offering them. Not very many strikes or times listed yet and I don't suppose many have traded. I will begin using covered calls as soon as I see a decent premium out about 6 months or more.

    Or quite possibly I can just offer to sell some calls for Jan 13 at whatever price I choose and they will be listed for anyone interested to buy.

    I suppose January is not the best month, however, as that is when year end completes and our biggest sales/profit months are just beginning. Or maybe that is a good time as everyone will be excited about another breakout year coming up.

    In any case, it is one more opportunity in this rapidly growing company.

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    • Nearly a year later and I am trying to sell some calls again. The first time I was pleasantly surprised to get $2.50 and $3.40 for $37.50 calls over 6 months out. I knew that was a good deal from the beginning and those two batches have both expired worthless at this point.

      But with the current rise in price, I have been offering more calls at a more attractive strike ($35) and lower premium with no interest being expressed. In fact, this time I'm rather surprised at how little activity there is in Raven options. Though I still think my offer is a good deal for me, so I guess I should not expect anyone else to want to buy calls to buy at $35. Now looking at it that way, I suppose people who have been buying or wanting to buy can easily see how cheap RAVN was just a week or so again and figure the price will come down. Why buy calls? And from a fundamental viewpoint, EPS have not shown growth. I've discussed that elsewhere, so why would the stock price go above $35 until there is a more promising earnings environment.

      The sole optimistic factor is all the investment in plant and people which Raven has made during the last two years. If sales increase, there will be infrastructure to produce product.

    • Offered a couple of small batches of $75 calls over the weekend and both filled this morning. A little closer in than I usually do because I want to get the taxable event in this year. The ones in my retirement account are for February of 13, also at $75. I am guessing that we saw that wonderful first quarter and the second quarter, while good, will be less wildly positive. It's a smaller quarter typically for applied technology. And even though engineered films could well exceed sales of Q1, I have a hard time imagining that it can be more profitable. Aerostar could recover well and will certainly show a lot higher sales due to inclusion of ES results, but I'm expecting it to be a tough quarter for them overall with all the changes going on.

      Will there be a lot of new aerostat orders? I have not a clue. Parachutes ought to continue being profitable. And, of course, corporate expense and depreciate will eat up more of the margin.

      But I could well be wrong and perhaps $75 is just the beginning of a long rise. So far I've been able to sell above $60 and replace those shares less expensively, above $69 and replace less expensively--but options lock one in a bit more in that one is not sure what will happen until expiration. I got $5 for the Novembers and $6.80 for the Febs. About a 10% premium to today's price for 6 months of vulnerability. I think I'll be able to replace those shares at less than $80 many times during the next year.

      Best, L.

      • 3 Replies to skiplarson98
      • Well, now that earnings are out I am confident my calls, at least the November expiration $37.50 ones, will expire worthless and I'll earn a nice premium. I got $2.50 a share for them but have not earned anything yet.

      • At this moment, that sale of calls appears to have been very smart. I could have bought my Nov. 75's back for half what I got for them today, and since I really don't want to sell in my taxable accounts, I am tempted. Yet my thesis was that the next earnings report would not be as outstanding as the last was, in which case a price over $40 might be even less probable than it seems now. Furthermore, it does just feel different to suggest that I should be able to buy back below $40 many times in the next 6 months vs what I said when I sold them--that I'd get many chances to buy back below $80 over the same period.

        I guess it probably calls for my usual strategy--offer to buy back my calls for a price well below the current offer and just wait to see what happens. Sometimes I regret it but sometimes I get lucky. Maybe for $1.00. I got $5 for them and that would be $2.50 in new shares, so $1 is 40% of what I got. I think I'll offer a bit less.

        Best, L.

      • PS. Of course I am aware that these will be $37.50 calls at twice the number of shares as the day of record will be tomorrow and I'll actually have the new shares delivered to my accounts on July 25. Not a problem for me, but I should have said I'd be able to replace shares for less than $40 each over the next year (I hope).

        It's one of the nice things about my way of investing. If the price goes down enough I get excited and want to buy. If it goes up a bunch, I get excited and hope to sell. Whatever happens, to me it is good.

        What a great country. What a great system is capitalism. And I only have to work half time to have all this. 6 in the morning to 6 at night (gg).

    • Thanks for noticing that. It looks like they are going to have <<< Jul 12 | Aug 12 | Nov 12 | Feb 13 >>> to start with. As you say, there hasn't been much volume yet, but the upcoming stock split may help a little. It does open up some possible trading "options" for us though. It may also tend to dampen the volatility a little also. I might be tempted to buy some calls if the stock gets hammered instead of adding shares for a short term trade.

 
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