A quick note about some of my recent put positions which have been closed at losses. Short selling can be full of bitter pills and we’ve swallowed a couple over the past week. While it is always my intention to find profitable trades, option trades magnify any market move against the position.  Big Lots and L Brands in particular had huge rallies post the election, which were not related to company news. 

It has been especially frustrating to see some of  our put positions move against us before earnings dates. You may see some option trades from me placed closer to the date when I expect a catalyst in order to lessen this risk. In a bull market it can be especially difficult to time bearish trades.

Ambarella (NSDQ: AMBA): Ambarella beat third quarter estimates handily. Earnings came in at $1.11, 17 cents  higher than estimates and up slightly year over year. The stock traded down due to management’s cautious tone regarding fourth quarter sales. I recommend buying the stock on weakness.

Ambarella has added many new customers. Just this quarter it added drone maker DJI, Nikon camera and Nest home security products to the list of consumer items that use its chips.  Many of these customers have already shipped products to stores for holiday sale. I believe management is being extremely cautious in guiding to a revenue number that is just 3% below estimates while it waits to hear how much inventory its consumer customers have on hand.

The company continues to add new automotive customers, which will reduce its dependency on the whims of consumers. For example, Mercedes Benz began shipping models with dash cams.Management specifically noted more and more automakers are using its chips in their dash cam recorders.

Big Lots (NYSE: BIG) Big Lots reported 3 cents for the third quarter, 4 cents better than the one penny loss expected and raised annual guidance by that amount. Revenue, however, missed estimates with comp sales coming in at the low end of expectations.

Although my premise that food sales would drop was correct, higher furniture sales fueled by easy credit saved the day. My model shows the company running into resistance in the next few quarters due to the bulk of its growth being fueled by its Easy Leasing and store credit cards, but it is unlikely the company will give a sales update before the end of the quarter.

So I closed my put position on Big Lots  at a loss due to the dearth of news before the option expiration.

L Brands (NYSE: LB): I also closed our L Brands put position this week at a loss. Despite L Brands issuing bad news in its third quarter earnings release two weeks ago and on its November sales report, the stock is trading higher. When I get the news I’m looking for but not the stock action, it’s time to bail out of a position.

L Brands reported an in-line level of November sales but specifically noted significantly lower profitability due to severe markdowns.

PVH Corp (NYSE: PVH): PVH Corp reported a mixed quarter. Although non-GAAP numbers beat estimates by 20 cents, there were several unexpected adjustments that drove the non-GAAP number up, mainly a larger currency expense and the delay of some marketing expenses that will be incurred in the fourth quarter.

I expect PVH to revise downward as analysts work lower Calvin Klein and Tommy Hilfiger revenue numbers into their models. I will also be looking for further details on the company’s sales breakdown in its 10Q filing with the SEC which should be filed in the next week.

Dave and Busters (NSDQ: PLAY), on which I have a put position, will report earnings on today, Dec. 6, after the market close.

Patrick Industries (NSDQ: PATK) and Camping World (NSDQ: CWH): Thor Industries, a major customer of Patrick Industries and supplier to Camping World, reported a stellar quarter. Revenue including its acquisition of RV manufacturer Jayco was up 66% and up 14% without the acquisition. Most importantly for our stocks, backlog more than doubled. Thor expects 2017 to be the best year for wholesale shipments of RVs since the 1970’s.

Recently sold portfolio holding Drew Industries (NYSE: DW) is also a beneficiary of strong RV trends.