Sunrun (RUN) and Squarespace (SQSP) sold off sharply this week.
Solar stocks took a hit due to supply chain concerns. Furthermore, the Senate approved a measure to ban imports from China’s Xinjiang region unless they can prove they were not made with forced labor. It’s possible Sunrun uses materials mined and processed with forced labor.
This news now appears to be priced in and the stock is oversold. I am recommending we roll our put out one month in anticipation of a rebound in shares.
SQSP continues to sell off due to a belief on Wall Street that growth will slow to a crawl as the push to get online during the pandemic has abated. I disagree based on data from 451 Research and holiday shopping numbers that show digital sales outpacing in-store purchases. This trend is not likely to abate, which is good news for Squarespace.
Our call is on track to expire worthless. We will simply watch it do so and sell another call against our shares soon.
RUN Dec Monthly (12/17) 45 Put
Current Stock Price: $34.07
Cash in Hand: $1.60
- Buy to close the RUN Dec Monthly (12/17) 45 Put for around $11.05
- Sell to open the RUN Jan Monthly (1/21) 45 Put for around $11.75
- Set your initial credit limit at $0.70, but adjust as needed to roll today
New Cash in Hand: $2.30
Expiration: After the close on Friday, Jan. 21
Potential Rate of Return: 5.1% in 60 days, or 31% annualized, if this put expires worthless
SQSP Dec Monthly (12/17) 35 Call
Current Stock Price: $28.17
Cost Basis: $42.45
Action: Watch call expire worthless
Potential Rate of Return: I am targeting breakeven for this position