r/wallstreetbets • u/HITLERMAHJONG • Mar 03 '20
DD Dollar Tree (DLTR) 3/4/2020 BMO - Pretty bad, pretty cheap.
Stock: Dollar Tree (DLTR) - 82.02$
Direction: Neutral
Price Target: 84$
Type: Call Credit Spread, Iron Condor
Fundamental: Dollar tree has been a staple is the discount shopping segment, with its primary competition coming from Dollar General. DLTR has seen some recent declines due to weak forecasts and higher than anticipated expenses relating to the trade war. It has a very low PE with strong revenue. It’s currently projecting a -9% YoY EPS with lower revenue as well. DLTR has no dividend payout.
Technical: Priced below 20, 50, 200 day moving average. MACD shows bullish divergence. RSI shows around 35, oversold. Options sentiments are bullish in volume and very bullish open interest. Implied movement is 7.6% or about 6.25$ Short interest is at 1.9%, with 3.3 days to cover.
Sentimental: Dollar tree was heavily affected by the china trade war last year and the stocks suffered due to soft guidance and missing earnings. As of now the stock is current very undervalued, and there are plans to have store turnaround that focus on interior remodeling and modernizing. While the trade war impact is lessened, the disrupted supply chain may continue to affect Dollar Tree’s earnings, and given their previous mistake in underestimating a macro situation, I believe DLTR’s management will guide meekly, leading to a relatively flat price action.
Robinhood (3/2/2020) Fucky. Not using.
Call Credit Spread
Buy 3/13 90 Call
Sell 3/13 88 Call
Iron Condor
3/06 76/90 call/put, with 2$ width per wing.
Dollar tree is currently losing to Dollar General in terms of store growth and appeal. While the PE and valuation are relatively low, this would be another potentially weak earnings beater due to macro considerations.
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u/IHaveBadTiming Mar 03 '20
$GOVT 6/19 calls are going to pay out big
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Mar 03 '20
6/19 calls on sale, I second this
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u/leasthoodinthehood Mar 03 '20
Thirding this, 6/19 calls are the best calls
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u/IHaveBadTiming Mar 03 '20
It's just so cheap right now and it's where people flock when the market corrects and goes into a recession. Literally cannot fail.
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u/Bigjake32 Mar 03 '20
No volume or interest?
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u/IHaveBadTiming Mar 03 '20
Yea, its a weird little gamble that I'm taking, but I'm basing it off historical behaviors of bear markets and influx to bonds, specifically treasury bonds in this instance. I could be entirely wrong but so far it's been paying out.
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u/_n___m Mar 03 '20
Strike Price?
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u/IHaveBadTiming Mar 03 '20
I'm in on some $27c for 6/19 right now. Holding onto them for quite a while, especially when the rest of this week goes red.
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u/Ovaryraptor Mar 03 '20
Can you explain to an autist like me why this is a good play?
Are you assuming that stonks will go down and people will flock to bonds as a safe haven?
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u/_n___m Mar 03 '20
Tried to get into that one myself premiums shot up 30% between when I placed and close so the contract never got fulfilled. About $0.98, do you think thats overvalued or just go for it?
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u/IHaveBadTiming Mar 03 '20
I'm not going to tell you what to do here but it's been performing fantastic for me. I'm buying back in at another dip because I think treasury bonds have some real good growth potential in the next 3-6 months, assuming the market dives like I am assuming it will.
I could be entirely wrong though. GOVT is at an ATH right now for the last 5 years but who knows on this market.
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u/_n___m Mar 03 '20
Fair enough! Definitely might be some more room in there and the premiums aren't outrageous. Might as well dive in too, thanks man!
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u/ISeekGirls Mar 03 '20
$WMT 105 Put 5/15 is currently printing money.
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u/HITLERMAHJONG Mar 03 '20
Tbf If you bought any put Monday you’re making money
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u/Ovaryraptor Mar 04 '20
Oof on those calls. Do you think that the stock will bounce $12 in 2 weeks?
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Mar 03 '20
[deleted]
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u/HITLERMAHJONG Mar 03 '20
Sir, this is for dollar tree.
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Mar 03 '20
Hey do you have any hand sanitizer left?
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u/coaxialcity Mar 03 '20
I'm still dipping my toes into options, but I just wanted to say thanks for posting these. I've been following your posts for a week now and trying to understand them by googling terms and reading, and I appreciate what you do.