Three weeks of a bullish market has inflated LEAP premiums out of sight. It is not unusual to see 2018 strikes $15-$20 out of the money for $12 to $18 with $2-$3 spreads. I had to find cheaper stocks and turn them into spreads to make any sense out of a potential play.
New Watch List Entry:
WDC - Western Digital - Company Profile
Western Digital Corporation, together with its subsidiaries, engages in the development, manufacture, sale, and provision of data storage solutions that enable consumers, businesses, governments, and other organizations to create, manage, experience, and preserve digital content worldwide. The company's product portfolio includes hard disk drives (HDDs), solid-state drives (SSDs), direct attached storage solutions, personal cloud network attached storage solutions, and public and private cloud data center storage solutions. It provides HDDs and solid-state drives for performance enterprise and capacity enterprise markets desktop, and notebook personal computers (PCs).
Western Digital bought flash memory maker SanDisk in October 2015 and this is going to supercharge their product offerings. They have already raised guidance after a couple quarters of integration. Revenue in Q3 rose 38% to $4.7 billion.
WDC recently announced a 50-cent quarterly dividend payable Jan 17th to holders on Dec 30th.
The consensus rating of 27 analysts is a buy.
They reported earnings on Oct 27th and spiked to $62. Post earnings depression saw them fade back to $55 and now they are moving up again. I believe they will exceed that $62 earnings high. They traded at $115 in 2015.
Earnings Jan 25th.
Shares have been choppy in recent trading with short-term support at $59. If we get any market weakness we could see that support tested again.
With a WDC trade at $59
Buy Jan 2018 $65 call, currently $8.50, no initial stop loss.
Sell short Jan 2018 $85 call, currently $3.00, no initial stop loss.
Net debit $5.50 but should be cheaper if triggered.
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