Generac Holdings (GNRC) has rallied 30% off its recent lows, pushing our call well into the money and our position into the black.
While this was intended to be a long-term position, the stock struggled soon after we initiated the buy-write, with shares falling from the low $120s down to a bottom of $86.29 in late December.
After breaching $113 this week, shares are giving back some of their gains this morning. I’m taking this as a sign to take profits now rather than hold this volatile stock for another week, especially given the added volatility that earnings season brings.
Speaking of earnings, Generac is expected to report in mid-February. Depending on its results and the Street’s reaction, we may trade this climate change play again after the announcement.
Current Stock Price: $112.64
Cost Basis: $101.06
- Buy to close the GNRC Jan Monthly (1/20) 105 Call for around $8.45, but adjust as needed to close today
- Sell shares at market
Profit: $3.13, or $313 per 100 shares