| Buy WOW Share price $39.11 |
| Woolworths has recently pulled back after its sales number showed a slowing in sales following the Covid surge last year. While this is disappointing we still feel the company is performing well and see the up coming split of the Endeavour drinks business as very positive. For those interested in buying the stock we see $39.20 as a great entry point and expect when the split takes place you will end up with an equal number of shares in each business. Looking back at when Wesfarmers split off the Coles group WES was trading at about $42.00 a share. Now 3 years later the combined value of the 2 stocks is about $71.00 so a huge benefit for those who bought in prior to the split. The chart show that WOW has found support at the 200Day Moving average and trend line. |
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We have also priced up an options trade to take advantage of buying into the expect June split. Trading Exchange Traded Options (“ETOs”) can involve considerable risks and are not suitable to all investors. For that reason, you should only trade ETOs if you understand the nature of the product and the extent of the risks you are exposed to. You should also carefully assess your experience, investment objectives, financial situation and other relevant issues The options strategy is Selling the May $39.00 to $38.00 put spread & Buying the June $39.36 call Sell the May $40.00 call The cost is about $3500 and the margin is about $8k on 100 contracts Prices subject to change. Maximum risk is $10,000 plus cost To minimise risk you may also consider a call spread. Please contact iInvest Trading & Advisory if you would like to trade. |
