Sell to close the Pinnacle puts for a 31% gain in less than a month

By Linda McDonough • October 26, 2017

Pinnacle reported a mixed quarter. Revenue missed estimates with unexpected shipments to FEMA not being enough to offset weak demand. Despite noting that October got a lift from additional shipments, fourth quarter guidance is not strong.

Sell to close the December 15, 2017, put on Pinnacle Foods (PF) with a strike price of $55 at $2.30 or higher. Symbol (PF171215P55).

These puts are up 31% since our October 2 purchase, a tremendous gain for a bearish call in a bull market!

As always, I’m eager to hear how this trade worked out for you. Please let me know via this survey.

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Weiyu Liu

10/26/17 ‐ 10:43am ET October 26, 2017 at 10:43am ET

Sold at $ 2.35, thank you. Nice trade, Linda.

Smith

10/26/17 ‐ 12:23pm ET October 26, 2017 at 12:23pm ET

Never got the fill at 2.30 as of 12;20 EST, so am waiting, It went down to 1.90 and is now at 2.20 ask, so I will be patient even through tomorrow or next week. Is this patience or stubborn for the price point on my part? Is it your philosophy that once a decision to sell is made, just take what you can get, or be patient for your price, and then for how long? Thank you.

Linda McDonough

10/26/17 ‐ 12:44pm ET October 26, 2017 at 12:44pm ET

I typically recommend $.10 leeway on my fill limits for options as the bid/ask spread can be quite wide.
As a financial publisher, I am prohibited from giving personalized advice so I can only reply with a general comment.
When an expected event has happened, like the PF earnings, I might give a day or two to see if the price moves closer to my limit. If the event is further out in the future and the options aren’t expiring within one month, I would wait longer.
Options are quite finicky so watch them closely or place a limit on your trade to ensure you get filled.

I hope this is helpful.

Best,
Linda

Julio Crespo-maclennan

10/26/17 ‐ 2:58pm ET October 26, 2017 at 2:58pm ET

Dear Linda,

I am trying to sell to close Pinnacle puts as you suggest for $ 2.30 or higher, but its price today, 26 October is $ 2.17. What shall I do? Do I try accept this price or wait and see if the order gets filled later in the week?
Thank you in advance for your help.
Best wishes,
Julio

Smith

10/26/17 ‐ 3:15pm ET October 26, 2017 at 3:15pm ET

Filled at $2.30 at 1514 EST. “Pay-tience” is a virtue today. Thank you Linda!

Mark F

10/26/17 ‐ 5:35pm ET October 26, 2017 at 5:35pm ET

Closed PF @ 2.50 for a 45% gain. Great job, Linda.

John R

10/26/17 ‐ 11:02pm ET October 26, 2017 at 11:02pm ET

Nice 30% trade, Short, and Sweet. I love the quick turn keep the Good Trades coming! Thanks Linda

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About The Author

Linda McDonough

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Linda McDonough is a veteran hedge fund analyst who loves to break down company financial statements and identify market inefficiencies to uncover big opportunities. She believes in a boots-on-the-ground approach that includes surveying customers, interviewing company executives, or doing whatever it takes to see what others don't.

She's now brought her experience as a hedge fund analyst to subscribers of her Profit Catalyst Alert service. Her system identifies small- and mid-cap stocks that are about to move due to catalytic events that few others can identify...until it's too late. These events often times result in massive gains for her followers.