Pawning Our Future with EZCORP
By Paul Price of Market Shadows
Market Shadows sold 5 contracts of the June 21, 2104 $12.50 strike price puts on pawnshop operator EZCORP (EZPW) this morning.
We collected $1.95 per share for committing to buy @ $12.50 per share. Our ‘if put’ price would be $12.50 (the strike price) less $1.95 (the put premium) = $10.55 /share.
That break-even price is lower than any trade in EZPW has taken place since 2010. It is close to the absolute support levels that have held since 2007.
Our maximum gain is 100% of the $975 we received upon the sale of the puts. That will occur if EZPW closes above $12.50 on next June’s expiration date.
Our worst-case scenario would be forced to buy 500 shares for a net cost of $5,275.
Tax-loss selling may be overly depressing the price, setting EZPW up for a nice January bounce.
This new option position will now be reflected in our Virtual Put Writing Portfolio .
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