Flash update of the 140K all-JCP double-your-money-in-a-year naked put-writing portfolio
11/04 - transfer in 140,000 from the quarter-million-dollar long-term naked put-writing portfolio. S & P at 1,762
11/06 - 127,485 (S & P 1,770), low valuation from inception
11/08 - 135,590 (S & P 1,771)
11/15 - 147,290 (S & P 1,798), high valuation from inception
11/20 - 160,880 (S & P 1,781)
Up 14.9%. Portfolio gain to date (average of 5.7% per week)
Up 01.1%. S & P 500
350 contracts of the 5.50-strikes expiring on Nov. 29
100 contracts of the 6.50-strikes expiring on Dec. 13
400 contracts of the Dec. 5-strikes
275 contracts of the Jan..5-strikes
280 contracts of the Jan. 4-strikes
100 contracts of the Feb. 5-strikes
200 contracts of the Feb. 4-strikes
400 contracts of the Mar. 4-strikes
Note: Look at the safety of these investments despite the fact that every one is earning a minimum of 1.7% per WEEK. The stock closed on today at $9.44.
My puts on JCP aren't worth much more than a cup of coffee right now but I'm sticking with them until after the holidays. Earnings were out yesterday and were terrible. Stock up sharply. Can you say manipluation, boys and girls?
Almost 100 million shares changed hands on Wednesday. That was hardly manipulaton; it was short-sellers with undeserved profits scrambling for the exits. The earnings release completely shot down the bearish case that JCP had so alienated its normal customer base that they simply wouldn't be returning to the stores anytime soon. But shoppers are always going to respond to big sales and discounts and nobody is going to undercut JCP this holiday season. The company also spent over $2B sprucing up the stores and putting back the kind of merchandise that their blue-collar base wants. I can't imagine the bears thinking that all that money plus the return to heavy discounting and couponing wouldn 't bring back the customers.
Nobody expected JCP to come anywhere close to breakeven; the big test was whether they could get the bodies back into the stores and on that score they have won.
Just three months ago this was a $16 stock and I find little reason for the stock to be barely half that price now given that the turnaround so far has been better than expected and they also have a war chest of cash that gives them additional time for the turnaround to take effect.
You have been led down the garden path by the likes of Motley Fool and what you haven't already lost on long JCP puts, you soon will. In the meantime, I'm earning returns that are other-worldly doing no more than selling the likes of 4 and 5-strike naked puts on an almost $9 stoc k.
I have a tremendous record when it comes to hold or fold decisions when one of my franchise stock tanks and this is one of the easiest decisions of them all. The balance sheet shows that in a straight liquidation shareholders would get $9 a share but we also know that the real estate was recently appraised as being worth almost $4 a share more than what the books show. This is why big fund managers were willing to pay $13 and up to acquire Ackman's shares.
Expect to lose whatever remains of your investment. Sorry