BY ANDREW GIOVINAZZI
April 11, 2024
Yo Pit Crazies,
There is still time to sign up for Mark’s big trade in UVXY on the 12th. Do so here.
The CPI number came in hot again and stocks sold off. Just like every other time in 2024. We hit all time highs just after. Not every stock is doing that well. Some are doing terribly. Sometimes I need to wait for an opportunity like the UVXY trade this week. One trade I am really waiting on is in WBA.
Every once in a while I screw up a layup trade. Or the market does something I do not expect it to do. One of those is a trade I am working in Walgreens Boots Alliance Inc (Ticker: WBA). Right there on that circle I owned the WBA Jun21 17.5 puts for credit. I had sold some puts and traded around the Jun put position. So I sold some more to create a diagonal put spread.
Then WBA proceeded to make a 26 year low after they just announced pretty decent earnings. What a mess. The good news is that I am stopped out here. The bad news is that my WBA trade for Div+ is no longer profitable. I am down $100 per 1 lot position. However I started this trade when WBA was close to $25 at the beginning of the year. If I just bought the stock I would be down $700 per 1 lot.
What the heck am I going to do now?
Nothing is what I am going to do!
Sadly WBA’s problems come from having a lot of stores in cities they have to close. It is not something that makes me happy when a drug store cannot run a business without all their inventory getting stolen. The negative sentiment on this is huge. I believe it is temporary after voters roll back soft on crime laws.
My short answer is I will keep rolling my short 21 put against the 17.5 put. WBA has 8250 stores in the USA and a market cap of 16 billion dollars. That is just $1.9 million per store not including what is in Europe and elsewhere. The good thing about a long diagonal is I can wait and that is what I will do and see if WBA makes a bounce.
What I won’t do is increase the position risk.
Don’f forget to sign up for Mark’s UVXY trade. VIX is still holding even though the market cannot sell off or just sputtered -1%. I don’t see VIX holding up here.
To Your Trading Success,
-AG
Andrew Giovinazzi
30-Year Trading Pro
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