Weekend Trader Series
December 1, 2024
Open Positions Update
- The Hims & Hers Health (HIMS) February 21, 2025, 17-strike call was closed after hitting its target profit of +100%. If you have not already done so, please close out of your HIMS position at the earliest opportunity.
The following is this week's recommendation:
Lemonade (LMND)
Place a limit order to buy the Lemonade (LMND) January 17, 2025 48-strike call at a limit price within range of the current market asked price when you place your order. At the close on Friday, November 29, this option was offered at $10.10. LMND closed at $51.81 on Friday, November 29.
Do not attempt to enter this position after Monday's close.
Please use the following guidelines to manage the position:
- Exit the position if the option is at a 100% gain from your entry price.
- If the option has not reached its target profit by 3:00 p.m. Eastern time on Monday, December 23, close the position.
- If there is a change to the above closeout parameters, we will notify you in your regular Sunday evening communication.
- The difference between bid and ask prices were very wide as of the close on Friday. If it remains wide on Monday morning, try to enter at the mid-point of the bid and ask of the option.
Insurance stock Lemonade (LMND) is staging a post-earnings breakout higher from the basing pattern it had been following since 2022. The stock ended the week above $50 and sports a more than 220% year-to-date lead, but could still have room to run.
There’s room for optimism among the brokerage bunch, as nine of the 10 firms in coverage still rate LMND a tepid "hold" or worse. Plus, the 15.65 million shares sold short make up a whopping 30.2% of the stock’s available float, indicating it could benefit from a short squeeze.
Shares could also benefit from a sentiment shift in the options pits. Short-term options traders lean bearish, per the equity’s Schaeffer's put/call open interest ratio (SOIR) that sits higher than 86% of annual readings. Digging deeper, there’s a heavy buildup of put open interest (OI) in the standard December expiration series.
Our recommended January 17, 2025 48-strike call has a leverage ratio of 4.0, and will double on a 25.9% rise in the underlying security.
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