Put Spread on AAP on 12/19/2022

Advance Auto Parts, Inc. (AAP) provides automotive replacement parts, accessories, batteries, and maintenance items for domestic and imported cars, vans, sport utility vehicles, and light and heavy duty trucks. 

The company offers battery accessories; belts and hoses; brakes and brake pads; chassis and climate control parts; clutches and drive shafts; engines and engine parts; exhaust systems and parts; hub assemblies; ignition components and wires; radiators and cooling parts; starters and alternators; and steering and alignment parts. 

As of April 23, 2022, it operated 4,687 stores and 311 branches in the United States, Puerto Rico, the U.S. Virgin Islands, and Canada; and served 1,318 independently owned Carquest branded stores in Mexico, Grand Cayman, the Bahamas, Turks and Caicos, and the British Virgin Islands.

Shares have formed a bearish "flag" following its quarterly report. On November 15th, AAP reported 3rd Quarter September 2022 earnings of $2.84 per share on revenue of $2.6 billion. The consensus earnings estimate was $3.32 per share on revenue of $2.6 billion.  

Guided Lower: The company said it now expects 2022 earnings of $12.60 to $12.80 per share and continues to expect revenue of $11.00 billion to $11.20 billion. The company's previous guidance was earnings of $12.75 to $13.25 per share and the current consensus earnings estimate is $12.98 per share on revenue of $11.10 billion for the year ending December 31, 2022.

We will be trading January 20th, put options

Last Trade: $140.16

Trading Range: $138.79 to $244.55   

Trade Buy 1 January $140.00 Put at $4.85 Sell 1 January $130.00 Put at $1.85 For a net debit of $3.00 Profit/Loss Analysis Breakeven at $137.00 Maximum profit is $700.00 at strike of $130.00 Maximum loss is ($300.00) at strike of $140.00 Closing Summary Sold 1 January $140.00 Put at $0.00 Bought 1 January $130.00 Put at $0.00

Position closed on 1/20/2023 at price of $0.00 with a -100.00% loss in 32 days.

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