Wednesday, June 15, 2011

How Are You Wearing $CROX?

Whether you wear $CROX shoes or think they're the antithesis of any fashion sense is immaterial - what matters is: do you think the secondary market for the stock has any future?  I do, and have since the Fall of '08, when $CROX was bottoming out.  I had read the 10Q's and 10K's and saw nothing but strength and common sense in the management of this company.  People around me echoed the "ugly shoe" and "going bankrupt" mutterings that the company inevitably attracted, but they had not read the SEC filings, they had not seen the evidence of a rabid customer base and an expansionist new management structure.

While the stock has been the place to be over the past 28 months, the real glory has shined in the near- and long-term call options.  I'm currently positioned in a vertical spread involving strike prices at $20, $30 and $35 for the Jan 2012 calls.  While the $20's are nicely in the money (I seldom buy ITM, but it's nice to do periodically), the $30 & $35 will only pay off if $CROX appreciates significantly, which is in no way guaranteed.

Clearly, I'm not concerned about loss, merely about maximizing upside.  Is this too risk-tolerant for your portfolio?


[Note/Quote 6/16/2011:
"WJB Capital's chennel checks indicate the new Crocs Chameleons are selling "like hotcakes." The analyst said the biggest concern is that the company didn't realize just how big of a hit they and and didn't make enough of them. Shares are Buy rated with a $26 price target."  ..TS.]

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