$MSFT buyout of $LNKD created some massive gains for CALL options.
One particular strike surged over 200,000% yesterday. From $.02 to over $43 each. There was a late trade of these options on Friday for roughly $300. The same trade yesterday morning was worth almost $700,000. Yes $300 to $700,000 in less than a full trading session.
We were bullish on OpenTable, Inc (OPEN) back on December 10th, as the chart showed signs of a potential breakout from $46.21. In little more then a month, the stock climbed over 20% hitting $55.95 on January 25th. See the chart below for our original call:
Since then, OpenTable, Inc (OPEN) has channeled in a tight range as folks look for catalysts to fuel the next surge or fade. Yesterday Raymond James downgraded OpenTable (OPEN) from Outperform to Market Perform. The stock sold off on the news, but found footing and settled above $54. We think OpenTable, Inc (OPEN) is ready to break out of its current trading channel and test $60 in the next few weeks.
OpenTable, Inc (OPEN) was once trading over $100 and on top of the world. A world that came crashing down as growth concerns scared investors. We now think the stock looks very attractive. It's forward P/E ratio is under 30, the company is debt free, generating nice cash flow, and continues to show strong double digit growth.
Any frequent diner will tell you how entrenched OpenTable, Inc (OPEN) seems to be, and with a 1.2 bil marketcap, it would not be a stretch to think it is a buy out candidate. With some more upside on the stock possible, and the days of easy money ending, one would have to think something would happen very soon.
We currently hold March 55/60 calls and may add or sell our position at any time.
We have written about this company a few times over the past month.(Here and here). SODA (SodaStream) was a $70+ stock in the summer, and has succumb to the growth stock syndrome, where skeptics and short sellers rip the stock apart.
It seems SODA(SodaStream) has found its short term bottom, and is ready to break to the upside. Here is why:
1. It's a great product. I remember early last year, standing at the line at the supermarket, listening to some ladies discuss what was on their Netflix Queue. It was then that i knew Netflix had hit the mainstream. Have you ever tried SodaStream? Ever saw the product. Ever spoke to someone who has used it... well it isn't a "has"... because they use it everyday. The last hurdle for SodaStream in the U.S. is Walmart. But they won't need that to continue growing.
Where you can get SodaStream:
2. Soft Drinks account for $57 Billion in revenues in the U.S. in 2010. For 2010 SodaStream did just $213.2 million in revenues and expects continued growth for 2011. Growth? There is quite a bit of opportunity to grow in just the U.S. , considering a large percentage of their business is international right now. Anyone stop by their local Target or BestBuy and see a SodaStream Demo? Thats right, reps doing in store demo's. Last time I saw that from a beverage machine, was a few years back, and it was the Keurig. Nice read on that here.
3. The Short interest in the stock is 34.1%. It almost seems like folks are so set on making their trade "right", that they have shorted the snot out of it to make sure it happens. Well it seems like their short term success, will be our short term glory soon. It would take over 7 days for folks to cover their shorts. Just needs a spark.
4. SodaStream announced a partnership with Kraft, where some of Krafts top brands like Country Time Lemonade and Crystal Light will be available for the SodaStream in-home carbonation system. I would say it's a very good sign, when a company like Kraft takes interest in your products. Well it's more then taking interest, when they make them available for use on your own product.
5. As of the close on Feb 13th, 2012, SODA (SodaStreams) Marketcap was $728 million. A paltry number for a company that grew over 20% YOY, has zero debt, and is just getting it's footing in major markets. Over the past week, there has been chatter of Kraft acquiring a stake in SODA(SodaStream). It makes sense when it would take $1 billion or so to gain a product that will help drive sales in other areas.
6. It looks like SodaStream did very well this holiday season. If the website traffic was any indication, Quarter 4 should be very nice!
With everyone worried about the environment, SodaStreams technology is a huge "green" product, as people just reuse their bottles, as opposed to recycling (hopefully) or throwing out their Coke or Pepsi bottle.
Bottom line, SodaStream seems to be a very attractive company, at a rock bottom price. There is quite a few ingredients that could lead to a 30%+ move over the next few weeks. A Walmart Deal, Kraft stake or buyout, or Huge company Earnings report on Feb 29th. Either way, we think she heads higher.
Disclosure: We currently hold the FEB $45 Calls and March 50 and 55 Calls
