After making 187% profit and closing the position on Wednesday, I think its time to get back in. LPX is trading down about 3.5% this morning and less than 15 minutes ago a large trader stepped in and bought 5000 contracts in a single lot of May $10 calls on the offer at $0.20. Open interest is 1004. This is a cheap shot to the upside with earnings expected on May 4.
Shares continue to trade cheap here at 2.5x cash and 0.8x book value. I think $10 is too far out. I like the following in-the-money bull put spread:
- Buy to open May $7.5 puts
- Sell to open May $10 puts
I just filled the order for net credit of $1.50. The break even is $8.50 and provides 150% return if the stock is above $10 by May expiration.
Technically, the stock continues to trade along the rising support line that has been in place since July 2009. I expect the stock to find first support at $8 which was previous 52-week high. On further sell-off, the stock could retrace to $7.70 rising support. I like the odds.
Good luck!
Shares continue to trade cheap here at 2.5x cash and 0.8x book value. I think $10 is too far out. I like the following in-the-money bull put spread:
