Buy Winnebago Puts

By Linda McDonough • January 30, 2017

Trade: Buy to open the March 17, 2017 put on Winnebago (WGO) with a strike price of $29 at 75c or lower (Symbol:WGO170317P29)

Event: Winnebago will not report earnings until late March but commentary from competitor Thor Industries and customer Camping World in early March should send the stock lower.

Rationale: Winnebago has been the stepchild in the RV market. It’s focus on large motorized RV’s has left it flat footed for the boom in smaller towable trailers. Winnebago’s motorized RV’s which make up 80% of revenue, continue to suffer.

The company’s November 2016 acquisition of Grand Design, a manufacturer of towable RVs, will boost its towable revenue but not enough to offset the motorized weakness.

The owners of Grand Design, who received almost $400 million in cash and 4.6 million share of Winnebago stock have already filed to sell these shares. This is lightning speed to sell after an acquisition and shows little confidence from the seller in the strength of its products.

On its most recent quarter, RV retailer Camping World noted an uptick in price promotion for towables, the first crack we’ve seen in this segment of the market. If towables weaken, Winnebago will made its acquisition right at the top of the market.

Call Details: On or about March 8 Thor Industries will report its second quarter earnings. Look for commentary on Thor’s motorized revenue without the benefit of its recent Jayco acquisition. Thor does not host a call with investors but offers detailed commentary on its website. Scour this for any talk of softer pricing, typically noted as a change in “promotional environment.”

On or about March 9 Camping World will report its fourth quarter. This new IPO operates 120 retail locations that sell RVs and accessories. Listen in for any comments about continued “aggressive pricing” on towables and the health of sales in the motorized market.

Stock Talk

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Derek: Las Vegas, NV

01/30/17 ‐ 3:39pm ET January 30, 2017 at 3:39pm ET

Thanks for the trade idea. For educational purposes, can you continue recommending what to listen for on the quarterly reports?

Derek

Linda McDonough

01/30/17 ‐ 9:22pm ET January 30, 2017 at 9:22pm ET

Absolutely Derek. Thank you for the feedback. I think it makes it much more interesting when you know exactly what to look for in an earnings call. Most companies can make even bad news sound good if you don’t know what your’re looking for! I plan on including details of what I think is most important and will include dial-in or webcast information for the calls.
Best,
Linda

black arrow

02/01/17 ‐ 1:28pm ET February 1, 2017 at 1:28pm ET

Hi Derek,
I was happy with APPL this AM beat top and bottom I took the opportunity to sell part of my appl stock.
Cheers

Derek: Las Vegas, NV

02/02/17 ‐ 5:03am ET February 2, 2017 at 5:03am ET

Awesome, definitely had a nice gain yesterday. Hopefully it continues!

Derek

Asjad Shamim

01/30/17 ‐ 3:44pm ET January 30, 2017 at 3:44pm ET

Hi All, Sorry new to this site just joined today. How does it work?
For this alert, does it mean we set the buy limit at price $29?

Derek: Las Vegas, NV

01/30/17 ‐ 3:52pm ET January 30, 2017 at 3:52pm ET

Welcome… $29 is the strike price and $.75 is the limit or less

Derek

Derek: Las Vegas, NV

01/30/17 ‐ 3:54pm ET January 30, 2017 at 3:54pm ET

Also, scroll up to the resources tab. You will find the member guide and other educational material that will be helpful.

Rick

01/30/17 ‐ 3:57pm ET January 30, 2017 at 3:57pm ET

No, you are purchasing a Put expiring on March 17, 2017 with a strike price of $29.
The recommendation is that you pay no more than $0.75 per underlying share.
If this is confusing, you may want to read the Intro to Options under the Resources Tab above.

Linda McDonough

01/30/17 ‐ 9:34pm ET January 30, 2017 at 9:34pm ET

Welcome Asjad and thank you Derek and Rick for helping out with your responses.

Some of my trade ideas are to buy stocks but others, like today’s Winnegago put trade, will be option trades. I agree with Derek and Rick that the Jim Fink Options Strategy report under the Personal Finance header on the main Investing Daily page, is an excellent tutorial on options.

I will mostly be issuing buy recommendations for puts or calls. Puts are options to sell a stock at a certain price (the strike price) before a certain date (the expiration date). Calls are options to buy a stock at a strike price before expiration. The limit price I give is the limit price on the option. I include the ticker for the option in every recommendation.

I do not expect to hold these options until expiration but usually will be trading them, hopefully for a profit. The option recommendations are much more time sensitive than the stock recommendations as option prices can be extremely volatile. While they can deliver terrific returns, they are very risky.

Please let me know if you have more questions, I’m happy to help.

Best,
Linda

Timothy Andrus

02/01/17 ‐ 10:32am ET February 1, 2017 at 10:32am ET

This is the first time trading at all, 60 medically retired, and I’m not getting it at all

Linda McDonough

02/01/17 ‐ 10:46am ET February 1, 2017 at 10:46am ET

Welcome Timothy- This Winnebago Put trade is an option trade. The bulk of my recommendations will be for buying stocks but many subscribers enjoy trading options. I suggest looking through the Options Manual which can be found on the main Investing Daily website under the Special Report Tab and then under Personal Finance. It is an excellent tutorial for option beginners.

This particular trade with the Winnebago put is a bet that Winnebago’s stock will fall before the expiration date of the option. If the price of the stock falls near the strike price ($29) before the expiration date (March 17,2017) the value of the put option, which is now about 75c, should rise dramatically.

Options are high risk, high reward trades so please do post any questions so that I can help you understand how they work before placing any trades. My stock recommendations are considerably less risky and are based on the expectation that the stock will rise over the course of the next 6-12 months.

Best,
Linda

greenmaster

02/02/17 ‐ 2:36am ET February 2, 2017 at 2:36am ET

Hello again Tim. Let me put some caution out there about the WGO puts. The stock was up yesterday. The options value for the Mar 29 Put dropped. This can be a good thing as U might be able to buy the puts a little cheaper. The caution is, If the stock rises any more, then U should probably consider the 30 Put. Keep in mind, U only have 6 weeks for the trade. Short time options should be traded closer to the stock price. NOT way out there. The further out U go on a short time frame, the more risk U are taking. The last thing we need in a Put play is to see the stock heading higher. The higher it goes, most likely the longer it will take to come back down. Tick Tock, Tick tock as the clock turns. Time is not your friend most of the time when it comes to trading options. Stock, U can sit on forever. Options, No way Hose’. So there U go. Be aware.

greenmaster

02/02/17 ‐ 2:05am ET February 2, 2017 at 2:05am ET

Hello Tim. Do U have a stock trading screen on your computer to look at? If Not, U need 2 get an online account with some brokerage company. If u currently have a stock buying brokerage account, they should have a online trading service U can access. It’s really very simple. U plug the stock into ur screen to watch the daily activity. U also should be able to access options of any given stock. Like my stock screen, I plug the stock in first. Then I right click on the stock ticker symbol and select options. Then it goes to all the available options. U will see month and a strike value. Winnebago for example. Mar-29 Put. Expiration date Mar 17-17. The March 29 is the strike price. March 17-17 is the expiration date. This means U are buying the Mar 29 Put that is only good until Mar-17-17. This translates to U are betting that the stock price will drop to at least $28-29.00 between Feb-2 to March 17-17. U have approx. 6 weeks to trade the option. The stock must fall to approx. $28-29.00 a share between now and the March 17 expiration date. So here U have it. Click on the March month date on ur stock option page. Go down the list. U will see the 29 Dollar strike. On my system, I add the option to my main trading page. Then I go and click on buy. This begins the trading process. U enter to Buy the option at the current prices. U will most likely see a spread in the prices. Like right now, It’s around .80 cents to $1.00. 80 is the bid. $1.00 is the ask. No U may have to play the game and enter ur trade amount U want to pay at .90 cents. Never pay full price unless U have to. I have a screen to watch the trade in progress. This shows the current bid & ask. U enter ur trade somewhere between the bid & ask. Like I said, 90 cents. If they do NOT accept that, U have a choice. Re-enter the trade at the another price, this time try 95 cents. OR, just sit tight, relax and wait for the trade to go thru at 90 cents. However, keep an eye on the stock price. If the stock keeps going down, the option price will increase in price. Then this will cost U even more to buy it. Next choice is to get in there at $1.00. Not wise to chase options. Best thing is just be a little patient and get the option at a reasonable price. The traders like to play games. They will hold out on you even for an extra 1 cent. Once U see this and figure it out how it works, it’s very simple. Buying is very simple. Selling is another story. Knowing when to sell is the real key. U only have 6 weeks, so get greedy. If the option gets to $1.50, that might be a good price to sell. U buy 10 contracts at say $1.00, that’s $1000.00 upfront. Sell at $1.50 for $1500.00. 50% profit in a short time frame. Not too shabby. Drawback? If the stock does not continue heading south, the option value will shrink real fast and by Mar-17 it goes worthless and U could lose ur money. What U are really doing is betting the stock is going to drop in price within the next 6 weeks. In order to salvage the trade and get ur money out of it if the stock only slowly falls, then by the expiration of Mar17, the price of the stock needs to be Under $28.00. The option expires $1.00 in the money. But do NOT let the trade expire in the money like that. U must sell the option b4 4pm the day of expiration. If U do NOT, then the option will be exercised and U will have to buy the stock at $29.00/ share. At 10 contracts, that’s 1000 shares at $29.00= $29000.00 U will need to pay for the stock. U will have a credit of $1000 since the option expired at $1.00. So $28,000 will be the end result U need to finish the trade. So make sure U sell b4 the 4pm Bell on that Friday of Mar-17-17. Selling the option puts $1000 in ur account and NO worry about buying the stock anymore. Keep ur money and move on to the next trade. Never ever let an option expire in the money. Sell that option and keep urself out of hot water. Now if U have the $28000 to spend, then go ahead and buy the stock and keep it for a while if U like and wait for it rise up again and then sell it for even more profit. But if it keeps heading south, U end up losing money.
the best way to make your money in options short term is the stock needs to move quickly in the direction of your bet. Slow moving stocks in a short time frame may end up causing U some grief.
Slow movers are for longer term option trades.
There are other ways to play this game. U can buy closer to the price options. They cost more, but they can hold their value a little better. If U are just starting this, U need to closely watch what is going on with the stock & the options.
Now what I did with this recommended option trade on WGO, is I bought the Apr-28 Put. This gives me 10 weeks to trade the option. It also provides for a higher rate of return. Also, the option will hold it’s value mush longer than the Mar-29 P.
I do this from experience. longer term option trades in case things don’t go so well at first. I can wait it out a little longer to make my money.
Hope all this helps. good luck to all of us.

James Willson

02/02/17 ‐ 2:07am ET February 2, 2017 at 2:07am ET

I purchased 5 march WGO $29 puts at $.70 each yesterday. The puts fell today to $.55. I’m thinking of buying more at the lower price but using the April option date which will be after Winnebago earnings report.. What do you think.

I am planning to use a July call option for the ANI Pharna trade with a strike price of $60. The stock closed at $61.48. I will probably make the trade before you can respond to me but please let me know what you think about what I’m doing.

Derek: Las Vegas, NV

02/02/17 ‐ 5:53am ET February 2, 2017 at 5:53am ET

Over the past 10 years WGO only closed lower 5 out of 10 years from now until April. Based on seasonality it’s a 50/50 shot that you will profit. Yesterday two short term bullish technical indicators triggered; MACD and Williams %R. Fundamentals seem to support a lower price. 3 analyst rate the stock a buy, 1 rates it overweight and 5 rate the company as a hold. Personally, I would only trade WGO as a earnings play in this instance.

Seasonality for ANIP has a 80% win rate from now until July. Jan 27th to Feb 1st there were six short term bullish technical indicators triggered; commodity channel index, MACD, momentum, price crossed moving average (21 day), Williams %R and momentum (again). Three analyst rate the company a buy. The 12 month consensus price target is $71. ANIP looks like a decent call.

Let us know how it works out for you…

Derek

Derek: Las Vegas, NV

02/02/17 ‐ 6:01am ET February 2, 2017 at 6:01am ET

BTW, maybe look at an out of the money call further out than July. Might be a better option because Linda is using a multiple of 2018 earnings.

Derek

Linda McDonough

02/02/17 ‐ 8:57am ET February 2, 2017 at 8:57am ET

Hi James,
There is some good technical (chart based) commentary here from other subs. This is not my specialty but I do think it’s helpful to watch the charts. I do think it’s a great idea to add to the WGO puts. Keep in mind WGO hasn’t announced a firm date but probably won’t announce earnings until aftr these puts expire (last week in March likely for earnings). However competitor Thor Industries and customer Camping World should announce before expiration and I expect less enthusiastic commentary from them.
On the ANI calls, the July 60 calls look like they are about $9.00. If you want to go out that far, you might think about buying some that are out of the money, these would cost less and allow you to put less capital at risk. I do expect ANI to have good news before then so you could also consider a closer expiration. Thank you for the question and the interest.
Best,
Linda

greenmaster

02/02/17 ‐ 10:12am ET February 2, 2017 at 10:12am ET

WGO TRADING lower today, But the option on the MAR-17 29 Put is down also. If U still want to buy the Puts, Better hurry and enter an order at .35-.40 cents. Not the .50 cents they are asking at the moment. Good luck.

DR083157

02/10/17 ‐ 12:36pm ET February 10, 2017 at 12:36pm ET

Are you still feeling strong about this Wgo negative bet. It keeps marching higher.

Linda McDonough

02/13/17 ‐ 8:39am ET February 13, 2017 at 8:39am ET

Hello,
I do think WGO will hit some speed bumps. The entire RV group has been a market favorite this year but is showing signs of slowing. LCI Industries (NSDQ: LCII) who makes components for RVs saw its stock drop 4% last week despite beating estimates. Most of the strength in the RV market is in the low priced towable segment, where WGO has little exposure. Competitor Thor Industries will report earnings on March 6 which will give us more information about the state of the motorized RV market, which I expect will not be good.
Best,
Linda

Peace54

02/12/17 ‐ 9:48pm ET February 12, 2017 at 9:48pm ET

Hi Linda, Can you give me an update of Wgo put and HEES call position?

Thank you

Linda McDonough

02/13/17 ‐ 8:50am ET February 13, 2017 at 8:50am ET

Hello
Please see my comments below about WGO. With Thor Industries reporting on March 6, we’ll have some information about how WGO’s motorized sales are going before the March expiration. You could also consider going into the April puts, which will give you more time to capture the downside. All of the puts are obviously cheaper with the stock moving up over the past week.
I still like HEES. The timing on buying options is very difficult and unfortunately this call purchase hit right as the stock had a brief roll over. I think they’re a great bargain now. You can also consider going out one month on these as well. I believe the positive trends in new rig counts will continue. Just this morning Baker Hughes (NYSE: BHI) reported that it added 12 new rigs just last week. That is 1.6% growth from just one week to the next.
Best,
Linda

Peace54

02/13/17 ‐ 11:30am ET February 13, 2017 at 11:30am ET

Hi Linda, how do you extend the expiration date on Wgo and HEEs ??

Thank you ?

Linda McDonough

02/13/17 ‐ 12:53pm ET February 13, 2017 at 12:53pm ET

Hello,

If you hold the March options, you can sell them and then buy the April expiration with the same strike. For example on the WGO puts, you could buy the puts that expire April 21 with a strike of either 29 or 30.

I apologize for not being clear. You cannot extend the expiration date on options that you already own. You need to sell the ones you own and then buy an option with the later expiration date. If you do not have a position yet I would recommend the April options for both WGO and HEES as it will give you more time to capture the stock move.

Best,
Linda

Paul Hedgi

02/13/17 ‐ 9:06am ET February 13, 2017 at 9:06am ET

cc up huge this am any news

Linda McDonough

02/13/17 ‐ 12:13pm ET February 13, 2017 at 12:13pm ET

Hi Paul,
Yes CC is up because of a reduced litigation risk. As I noted in the buy recommendation, the company assumed all the legal responsibility for DuPont’s issues with a plant in Ohio. This morning the company announced that DuPont will share the cost of settling this legal claim. I am very excited about this news as I considered the legal issue the biggest risk to the stock.
Best,
Linda

Henry Donaldson

02/13/17 ‐ 12:14pm ET February 13, 2017 at 12:14pm ET

GREat call on cc 5 points and holding the april 29,s call OK? FIRST NEW TRADE

Linda McDonough

02/13/17 ‐ 12:44pm ET February 13, 2017 at 12:44pm ET

Henry,

I do expect the stock to go higher and it reports earnings this Thursday before the open when I expect more good news. These options do not expire until late April so you do have some time until expiration but keep in mind they will lose value (less so if they are in the money) the close you get to the expiration date.

Best,
Linda

Michael S.

02/13/17 ‐ 10:55am ET February 13, 2017 at 10:55am ET

Hi Linda,

WGO March put of 29 is at less than 10 cents now. Is this still a good play? Should we double up?

Linda McDonough

02/13/17 ‐ 12:10pm ET February 13, 2017 at 12:10pm ET

Hi Michael,
I think they offer good value but I usually like to buy an option two months out so I prefer the April put at the same strike or you could buy a $31 strike if you prefer something closer to in the money.
See my comments below on WGO. I’ve sold PATK today based on my expectation that the best days are over for the RV stocks.
Best,
Linda

Phil Doty

02/14/17 ‐ 7:24pm ET February 14, 2017 at 7:24pm ET

New to your Trades Linda do not understand something about the WGO trade.
Why does it not appear as either an open or closed PCA trade?
Look forward to the response, Phil

Linda McDonough

02/15/17 ‐ 7:27am ET February 15, 2017 at 7:27am ET

Welcome Phil- The option trades show up separately in a table under the Portfolio tab, then choose options. The most recent ones are there and trades that have been closed for a while can be seen under the far right tab, aptly named, closed.
Best,
Linda

Phil Doty

02/15/17 ‐ 8:51pm ET February 15, 2017 at 8:51pm ET

Thanks I was able to find it – now we have to convince the market to give us a return on our investment (if it was that easy)

black arrow

03/10/17 ‐ 8:32am ET March 10, 2017 at 8:32am ET

Hi Linda, Was just looking over mkt info and it seems you may be right its Hasta Luego Winnebago
or “PUT” differently it seems we can expect what you expect!

black arrow

03/10/17 ‐ 8:34am ET March 10, 2017 at 8:34am ET

Winnebago Price Target Cut to $29.00/Share From $40.00 by BMO Capital
Today 8:24 AM ET (Dow Jones)Print
Ratings actions from Benzinga: http://www.benzinga.com/stock/WGO/ratings
I meant to paste this in
Cheers

Linda McDonough

03/10/17 ‐ 9:37am ET March 10, 2017 at 9:37am ET

Yes I saw this today also. That is a huge cut to the price target. CWH, a retailer who sells RVs also had a weak outlook yesterday so let’s hope the pressure is enough to get WGO way down.
Linda

John N

03/15/17 ‐ 11:55am ET March 15, 2017 at 11:55am ET

I bailed out on WGO yesterday morning and cut my loss. Today it is up further. Hope I did the right thing as I don’t see it dropping enough by 3/17.

Linda McDonough

03/15/17 ‐ 12:18pm ET March 15, 2017 at 12:18pm ET

John,
You were smart. I kept thinking the stock would drop further as the rest of the group was under intense pressure. Feels like I chose the wrong horse in the right race.
Linda

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