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Daily Stock Market Equity and Options Trading Commentary

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Wednesday, December 31, 2008

The Wings are Delicious, is the Option?

Over the weekend I had the chance to eat at Buffalo Wild Wings (BWLD) and really liked the wings. I checked out their stock, as I knew it was a public company, and I noticed that the stock has just been trounced (like most other stocks), except that the stock traded at its 52 week high (44.98) in September (not like most stocks) and that historically when this company reports they either POP or DROP. Therefore I did some speculation on BWLD today. The short interest on this stock is over 25%! I have a feeling if we see them beat the quarter on February 10 after the bell, this stock could bury my strike price of 30. I purchased some FEB 30 call contracts today for $60 a piece. The stock is trading at around 25 a share, and in 52 days I think this stock (if beating the quarter) could sky rocket on a short squeeze. Remember this is a speculation play, meaning I wouldn't "gamble" more than 0.5% of my portfolio on the bet. Say you purchased about 20 contracts for $1200 and the stock then reaches its 52 week high after they report (possible on a massive short squeeze)... That $1200 then would turn into $29,960. However if the stock finishes at 29.99 your $1200 would be $0. This is one call I will bekeeping my eye on, and IF you have money to speculate with maybe you should buy a contract or two at a limit of $50-$100 a contract.

HAPPY NEW YEAR! MAY 2009 BRING PLENTY OF PROFITS!


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