JC Penney's is in the downward spiral. Painfully obvious. They made a strategic move earlier this year to get away from what had become constant sales. Their customer base did not appreciate this move. They signed Ellen Degeneres as lead spokesperson. Their customer base did not appreciate this move. Seemingly every thing this once great american retailer does has blown up in it's face. JCP was set to report second quarter results prior to the market open on Friday August 10.
With this in mind, I bought the August 22 put options right before the market closed on Thursday August 9 at $1.52.
And as expected JCP reported disastrous results for Q2. And essentially admitted that as bad as that was, worse was likely to follow. The stock should have tanked and I should have banked coin. Sadly that was not meant to be. After dropping 6% in the pre-market, JCP turned it around and ended Friday up 5.88% (off of a high of $24.57 or 11.1% gain). This is what makes the market so much fun (and so endlessly frustrating!). No matter what the logical response should be, one just never knows how the market is going to handle news.
The bear case is still very much in force for JCP, so I have doubled down on this bet by purchasing the September 22 puts at $1.05. Having until September 21 for my thesis to be proven correct should allow me to exit these two trades at least flat, hopefully with a profit.
In hindsight, I should have opened with the September puts. The August puts expiration is just too close for me to able to work off bad price movement. So be it, lesson learned.
This material is provided for informational purposes only, as of the date hereof and is subject to change without notice. This material may not be suitable for all investors and is not intended to be an offer, a solicitation of any offer to buy or sell any securities. Following me in trades will lose you money.