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Put Options on MNST on 8/14/2012

Bearish Flag on MNSTMonster Beverage (MNST) is a maker of energy drinks. The company’s Direct Store Delivery segment offers carbonated energy drinks, non-carbonated dairy based coffee plus energy drinks, carbonated energy drinks containing nitrous oxide, non-carbonated dairy based espresso plus energy drinks, non-carbonated rehydration energy drinks, energy supplements, and ready-to-drink iced teas.

Monster Beverage Corporation’s Warehouse segment provides sodas, juice cocktails, juice products, fruit juice smoothies, seltzer waters, ready-to-drink lemonade plus tea drinks, ready-to-drink aguas frescas, and prebiotic and probiotic digestive wellness ready-to-drink beverages and powder drink mixes, as well as flavored water line.

It also offers lemonades, including strawberry, limeade, mango, honey, raspberry, and original lemonades. This segment markets its products primarily directly to retailers. The company distributes its products principally under the Monster Energy, Monster Rehab, Monster Energy Extra Strength Nitrous Technology, Java Monster, X-Presso Monster, Worx Energy, Peace Tea, Hansen’s, Hansen’s Natural Soda, Junior Juice, Blue Sky, Hubert’s, and Vidration brands. 

Stockwinners is bearish on this name for the following reasons:

  1. Firm missed the estimates on their  earnings report
  2. Shares have formed a bearish "flag" following its quarterly miss
  3. Use today's strength to buy a put option

TRADE: BUY 1 September $55 Put for less than  $3.00

Last trade on the stock: $54.97

Breakeven & profit/loss Analysis:

  • Breakeven   $52.00
  • Profit   below $52.00 ,Max profit $52 if MNST goes to $0.
  • Losses btwn $52-$55 up  $3.00 ,Max Loss $3 above $55 by Sep Expiration

The payoff table is presented Below:

Trade

  • Buy 1 September $55.00 Put at $3.00
  • For a net debit of $3.00

Profit/Loss Analysis

  • Breakeven at $52.00
  • Maximum profit is unbounded
  • Maximum loss is ($300.00) at strike of $55.00

Closing Summary

  • Sold 1 September $55.00 Put at $4.35

Position closed on 9/12/2012 at price of $4.35 with a 45.00% gain in 28 days.

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