Category Archives: JAKKS Pacific, Inc.

JAKK Jun20’14 10 PUT roll

With the June option expiry coming this Friday, 20 June, it was time to see what puts are expiring worthless, and what might result in stocks being put to me. One put that would not expire worthless was the 6 JAKK Jun20’14 10 PUTs that I was short. The other 6 JAKK Jun20’14 7.5 PUTs had a good chance to expire worthless with JAKK closing at $7.79 on the 18th.

With regard to the puts at $10 strike, I could either let the stock be put to me and hold a long stock position, or I could roll my position. I decided that I’d rather roll the position to July and no cost, or a small credit. This is partially because the stock would be put to me at an effective buy price of $8.10, which doesn’t reflect any discount to the current trading price.

I first placed an order to roll the contracts to July with a credit of $0.20 per contract. After a few days, the were not filled so I changed the order to a $0.05 credit and then at even money. I managed to roll 2 contracts at a $0.05 credit on the trading session of 16 June and the remaining 4 contracts at even money on the trading session of 18 June.

Effectively, I didn’t make or lose money at the roll. Given that the contracts were going to expire in 2 trading sessions, I think it was fair enough.

I’m uncertain that JAKK will rise to <$10 by the July expiration date, but hopefully it will rise back to the $9 levels that it traded during LH Apr to FH May. That would probably be a good time to take profit.

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JAKKS Pacific, Inc.

On 14th Apr, a sell limit order for JAKK was filled at $8.50. That certainly got my attention and as you can see in the chart below, JAKK’s price movement was start of a breakout. I wonder if the stock will be able to fill the gap.

Since my stock was sold at a 70% profit, I was wondering what would be the best way to continue participating in the upside of the stock. I decided to sell 6 JAKK Jun20’14 10 PUT for $1.90 premium. If the stock doesn’t close above $10, I would be buying back my JAKK stock at an effective buy price of $8.10, which is lower than the price I sold my stock for. If the stock closes above $10, I would make another 23.4%. If the stock closes above $10.489, then I would have been better of holding my original long stock position. 

I’m not sure if JAKK can maintain its momentum. Since I think the stock is still undervalued, I am comfortable with this way of participating in the upside. Also, the put options had an implied volatility of ~62% which I feel is high enough to make short puts a better position than long stock.

Assuming the company can improve its margins back to 2010 levels, the stock is easily a double. Thus, I actually hope that I get put the stock.

Side note: I stupidly entered a buy put order instead of sell put order. It cost me $0.20 per contract or $120. I really don’t need such stupidity to cost me further.