One of the most exciting things right now about Beyond Meat is the amount Implied Volatility the stock generates. People are so excited about this stock that demand and anticipation for higher prices in the stock have caused options to trade for far more than they are actually worth. You can learn more about Implied Volatility here. This stock in my opinion is nothing more than a well designed PUMP AND DUMP. Yes, You heard that right. I believe that in a perfect world, Beyond Meat would IPO for $21 and trade between $21 and $45 for 10 years before being a billion dollar company. But today’s market is undisciplined and things arent perfect which is why we have to find a way to take advantage of the temporary absurd price.
Non directional trading is how I am quickly learning is by far the safest and most effective way to not only trade stocks but capture this implied volatility. We do this by trading IRON CONDORS. Now let’s put this trade together!
Beyond Meat is a food company that manufactures plant-based meat products. The company currently has Annual sales of $90 million dollars but has a current valuation over $12 Billion dollars. This massive inefficiency provides us with a lucrative opportunity that I would like to present to you.
On July 29th 2019, Beyond Meat will deliver it’s quarterly earnings. These results are expected to be impressive as the company is still incredibly small and experience vast growth. Growth is the #1 reason the stock is trading at such insane levels. Once these results are delivered, I expect the stock to move as much as $25.
I suspect that after the release of earnings, Beyond Meat will be unable to go beyond $225, if that. In fact, I believe that earnings will be an opportunity to sell premium on the stock because I believe that after the earnings announcement the stock wont have the same drive or demand and will actually go down in value. Non directional trades are relatively new to me but I’ve been trading for awhile now. Learn more about me here.
At just one option, this stock generates over 48% return on investment. This trade will likely generate even higher return once Beyond Meat has delivered earnings. The only thing that could ruin our plans to move forward would be Beyond Meat would miss! A really bad miss would send the stock lower 50% for sure. Blasting right below $138 to maybe the low $100’s.
Looking for the stock to stick between $138 and $246. Again, looking to take this trade immediately after earnings if the company exceeds what the market was looking for.
This area will be update at the end of the trade.