My Positions on Under Armour 1 Day Before Earnings Release



As I've mentioned in previous articles I believe the Company will go lower in the next few months. I have backed my words with some of my money on PUT options in the mid-single digits expiring in July 2018 and January 2019 as you can see on the picture of my position.


I've explained how the company is expecting to be more levered in the next coming months and how their financials are deteriorating as presented in their most recent 10-K filing. I have also given you my personal opinion on why I believe the company will experience lower margins during this fiscal year and an my overall thesis on why I think there's more trouble ahead for the company.

However, I am only human and my fears get to me. Market sentiment is on the rise, companies have been beating expectations and I can't do but wonder if my research will hold true. I still believe that the company still has to clear some hurdles before a turnaround is in place. Interest expense is a clear example of one of the issues the company has to get a grip on.

In an effort to minimize a little bit my exposure I have purchased two "In-The-Money" calls weekly expiration for this Friday at $14.50 strike price. The idea behind this (and many people will differ) is to hedge my PUT options. My long bet is still the same, bearish in the near future. If the company beats expectations and the stock rises in price I will be capturing some money on anything over $15.80 (I bought them at $1.30 ea. + $14.50 strike) hence recovering some or all of the money invested in my PUT options while allowing time for them to become true.

If the other scenario holds true and the company misses expectations hitting the stock price I will lose my 2 CALL options probably expiring worthless but my other options should raise in price enough for me to not only recover my hedge investment but make some nice profit on them with plenty of time ahead to cash out.

Of course there's still a third scenario where the company only meets expectations and giving neutral guidance that will most likely keep the stock at or near its current levels. This will make me lose some of my investment in the CALL options but I will still hold my bearish bet for another quarter.



Subscribe to keep up with my analysis, recommendations or just to see what happens to my portfolio. Because no matter what the outcome is I will still post about my experiences.

See you soon!
AG


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