That was easy.
On Nov. 9, an investor rolled a long position in EZCorp by selling
the December 22.50 calls and buying the December 25s. This allowed
the investor to collect $1.25 of principal while remaining long the
red-hot pawn-shop stock.
Today the trader sold 2,000 of those same December 25 calls for
$2.60, more than twice their original price and purchased a new
block of January 25s for $3.15. This time instead of collecting a
credit, the investor paid $0.55, according to optionMONSTER's Heat
Seeker tracking system.
In return, this move purchased the right to continue making money
from EZPW, whose business is booming as banks cut lending.
The company's last earnings report on Nov. 5 showed a 33 percent
gain, as profit and revenue both exceeded forecasts. It is also
adding new locations and raking in cash from scrapping jewelry as
people take advantage of high prices for gold and silver to sell
their old necklaces and bracelets.
EZPW is up 0.84 percent to $27.62 in morning trading. It has risen
48 percent in the last three months and is close to its all-time
high of $27.87 established Wednesday.
Despite the gains, there are reasons to expect more upside because
it's valued at just 10 times forward earnings and has a
price/earnings growth ratio of 0.73 times.
The call roll pushed total option volume in EZPW to 70 times
greater than average so far today, according to the Heat Seeker.
(Chart courtesy of tradeMONSTER)
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