SAM shows an interesting chart trend that can be seen on a 5 year chart (and perhaps longer). Price tends to increase rapidly towards the end of the year (Q4 to early Q1), then goes flat for 2-3 quarters.
With this past behavior in the market, and the current somewhat high PE, my guess is that SAM will take a nap for 6 months or so, and my Sept 150 calls will either expire worthless, or decay for long enough that I can roll up/out sometime in the summer. I expect to still have my shares this time next year, perhaps with some additional options premium. Time will tell.
Nice observation. If you were selling a covered call in the next week what would it be? Guessing
April 160 if you could get 4-5 bucks would be nice. Decided this is a company that has the best
craft beer that I should just stick with and stop trading the market. Selling calls every few months
out of the money and hope the stock does not get called out works.
You can probably get the april 155s for $4.40, but I would be banking for a pull back at some point in time. I would also not be buying shares at 34x earnings which is where the price is now.
If you wanted to invest for total return, but write the April 150s and collect about $7.00 giving you a purchase cost of $144/share. This offers a 4% return in about 8 weeks, and some downside protection from current pricing.
In my case, I sold the calls at $135, and rolled up/out to $145, then $150, but this is on a position that I have had for many years. I fully expect the stock to pull back significanly before the $150s expire in September, and I do not expect to be exercised. I would also not be comfortable buying at $144.
Final note: options on SAM are highly illiquid, and are nealry untradable given huge bid-ask spreads. I only buy with limit orders well inside the spread, and just wait for someone to come in and fill the order. Sometimes I wait a long time. Because of this, I almost never trade SAM options. I only did in this case because my opinion was that the pricing had gotten out of control.
With all of that said, I also think that SAM is in the middle of a huge slow motion short squeeze. Short interest is qute high, nearly 30% of float if you exclude Koch's class B shares, and the shorts are down HUGE since the Dec 13th pop from $114. Eventually these guys will need to cover, either voluntarily or after getting margin calls. Sucks to be them.