Put Spread on TPX on 7/30/2013

Tempur Sealy International (TPX) engages in the manufacture, marketing, and distribution of bedding products in North America and internationally.

The company offers mattresses, pillows, and adjustable bed bases, as well as various cushions and other comfort products. It offers mattresses, pillows, and adjustable bed bases, as well as various cushions and other comfort products under Tempur, Tempur-Pedic, Sealy, Sealy Posturepedic, Optimum, and Stearns & Foster brands.

The company sells its products through furniture and bedding retailers, department stores, hospitals, nursing homes, healthcare professionals, and medical retailers, as well as through its call center operations, company-owned stores, third party distributors, and Internet. The company was formerly known as Tempur-Pedic International Inc. and changed its name to Tempur Sealy International, Inc. 

Shares have formed a bearish "flag" after the company reported earnings that fell below the estimates. Lower share prices are expected for this stock.

52-Week Trading Range: $24.02 - $51.02

Last Trade: $37.10

Here is the trade: 

Buy One September $38 Put Option for $2.55 or less

Sell One September $35 Put Option for $1.30

Net Investment: $1.25

Payoff Table Show Below: 

Trade Buy 1 September $38.00 Put at $2.55 Sell 1 September $35.00 Put at $1.30 For a net debit of $1.25 Profit/Loss Analysis Breakeven at $36.75 Maximum profit is $175.00 at strike of $35.00 Maximum loss is ($125.00) at strike of $38.00 Closing Summary Sold 1 September $38.00 Put at $2.50 Bought 1 September $35.00 Put at $1.00

Position closed on 8/21/2013 at price of $1.50 with a 20.00% gain in 22 days.

Updates

8/21/2013 12:05:04 PM

We are closing TPX with success following its recent pull back.

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