Bull or Bust

a bull's view

RITE AID EARNINGS & MORE

rite aidRITE AID
EARNINGS DAY!

It’s the day we’ve all been waiting for! The day Rite Aid shows the world it still has life and isn’t going down without a fight! This could be wishful thinking on my part, but I believe there is value in what remains of this 4 Billion dollar market cap company.

Today will be a big day…Rite Aid will report earnings before the market opens which will set the tone for the rest of the session. At 9 AM CST the FTC will meet to discuss (we hope) the Walgreens and Rite Aid merger. We could literally have a decision on the merger today?! Do I believe this will happen? No.

FTC DECISION

The idea that the FTC would choose earnings day to decide on this merger after nearly two (2) years of delays just doesn’t seem logical to me. I’m not saying the FTC can be considered “logical” most of the time, but damn this would be just cruel and unusual punishment don’t you think?

However, one might think maybe that’s exactly what they’re doing? Waiting for earnings to see what condition Rite Aid is truly in. If earnings are good will they decide to kill the merger and let Rite Aid stand on its own? If earnings are bad will that be the final nail in the coffin and provide FTC basis for approving the merger? All great questions…

It is a common belief the FTC will simply decide to say nothing at all and allow the July 7th deadline to come and go. This could provide them the ability to handle the merger in a few different ways and could create some distance between the FTC and a very public merger. A merger that has been mishandled and pure chaos for the FTC in general.

BOTTOM LINE

The bottom line is simple: it’s midnight and I’m sitting here thinking about earnings and FTC decisions instead of enjoying a good nights slumber. Am I worried about losing money? No. Why am I not sleeping? Because this is going to be like Christmas morning! You’re either going to love it or hate it! Will I be upset if I’m wrong? No. Why? Well, if you read this blog and keep up then you should know…I plan not to care.

HOLDINGS

The tech dip yesterday presented a good buying opportunity. I opened long call spread positions in the following equities (all of which are already profitable):

Pandora [stock_quote symbol=p] This one I have to include because it’s been great. I didn’t open the position yesterday, but it was within the past few days. I cannot remember exactly. Regardless, I bought the Jan 2018 10 call and sold the Jan 2018 12 call to open. I am doing very well with this transaction.

Microsoft [stock_quote symbol=msft] I bought the Jan 2018 70 call and sold the Jan 2018 80 call to open.

Oracle [stock_quote symbol=orcl] I bought the Jan 2018 50 call and sold the Jan 2018 60 call to open. This one is funny to me. I have never liked Oracle, but I do see what they’re doing and they’re coming back strong. I also like companies that find a way to fight!

Western Digital [stock_quote symbol=wdc] I bought the Jan 2018 87.5 call and sold the Jan 2018 100 call to open.

Notice a pattern? Maybe it’s not that obvious, but the lower strikes are all at prices I would certainly pay for the stock in January.

For example: if Western Digital remains below $100 per share until January, I will collect the entire premium for selling the 100 strike and I will have the ability to call the shares at $87.50 per share. Best case: WDC is hovering around $98.00 in January and I call…

Stock and Option Trading