Bull Call Spread L Brands With Yield Up To 684%

Bought spreads in LB.

music selection:  “Syndrome” — Gemini Syndrome

weigh-in:  191.8 (0.4)

man in black suit jacket and black pants figurine

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L Brands (LB) owns Bath and Body Works and Victoria’s Secret. These are two largely mall-based retailers that have largely avoided the retail apocalypse. Except recently, Victoria’s Secret property has been doing poorly among Millenials and Zoomers. Their marketing is a relic of days gone past and became viewed as tone-deaf by younger women. The company has made great strides towards hiring brand ambassadors that reflect better diversity and inclusion and their image among younger women has greatly improved. I’m not making a long-term bet on LB, but I really like the recent chart action. Thus, I decided to get into a bull call spread.

I bought 36 bull call spreads yesterday morning at the 77.5/80 strikes and 17SEP2021 expiry for an average of 1.3294 per share. That put 4,786 in the capital at risk over 47 days. I currently enjoy 1.54% downside protection to break even. Should that hold for 47 days, the full profit of 4,214 will be earned or 88.0%, which is 684% annualized?

My only threatened spread right now is MDLZ, which is just a few pennies below break even. If the 20AUG2021 expiry were now, I’d book 12,725 in profit for the month. I’m banking on the Fed keeping the spigot on full blast for another couple of months.

Devour your prey raptors.

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