PLAY: Buy the GMCR November 45 Puts (O:GMCR 11W45.00) at market, good for the day.
Dear Bottarelli Research Member,
Over the last few sessions, the trading in Green Mountain (GMCR – NASDAQ) has gone from ridiculous to utterly insane. It all started with comments from Einhorn about shorting the stock. Then, the reasons for the short were the same issues we’ve all known about for months – patent expirations, over-valued stock, possible accounting fraud. Nothing new was brought to the table. But nevertheless, the stock fell from $110 down to current levels around $60.00.
Now, there’s a new rumor that GMCR will delay their earnings announcement, which was originally scheduled for today after the market closes. If true, this could be the kiss of death, which could further fuel speculation about the SEC’s accounting probe.
In short, those manipulating GMCR’s stock price are pulling out all the stunts and it’s setting up for major fireworks. As you know, we’ve been speculating going into today’s earnings report using the GMCR November 85 Calls (O:GMCR 11K85.00). But if the earnings release is delayed, our upside trigger catalyst is now gone.
Therefore, if you’re holding the calls, we now feel it’s smart to protect yourself against more crushing downside by adding a very light position in GMCR November 45 Puts (O:GMCR 11W45.00). Taken together, this will give us an earnings-strangle position with a huge spread. But honestly, I could see GMCR fall to around $40 or climb back to $90 come November. It’s been that volatile. Given what we’ve seen lately with this one, let’s add a small position in the November 45 puts for insurance. Then, we’ll see what happens (or doesn’t happen) with the earnings release and we’ll go from there. For now, here’s the play…
PLAY: Buy the GMCR November 45 Puts (O:GMCR 11W45.00) at market, good for the day.
And as always…
Lock and load!
Sincerely,
