Panera Bread (PNRA) is similar to Costco (COST). Both companies are much loved by investors and rarely sell at cheap multiples. Each has an enviable long-term growth record.
Temporary share price weakness is the best time to sell puts on names like these. The Market Shadows Virtual Put Writing Portfolio already established a short put position in COST. This morning we added two new contracts on PNRA’s Jan. 2016, puts.
We sold one contract each of the $160 & $170 strike price puts at $23 and $29 respectively.
Our worst case scenario would be forced purchase of 200 PNRA shares, one lot at a net cost of $137 ($160 strike price - $23 put premium) and the other 100 shares at $141 ($170 strike - $29 premium).
If Panera does rally past our chosen strike prices we’ll pocket 100% of the $2,300 and $2,900 premiums collected.
Panera Bread has not changed hands that low since mid-summer of 2012. The shares peaked at $194. 65 in May 2013 and hit $193.20 earlier this year. The dead low was $150.30 in 2013 and was $149.60 so far in 2014.
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