Naked Puts: First Cash Financial Services (FCFS)
I’ve followed pawnshop company First Cash Financial Services (FCFS) for almost 10 years and am an expert in consumer finance.
While FCFS stock is more than 20% off its highs after reporting a weak quarter, I believe the company has a great long-term plan in place. First Cash already is taking over the Mexican pawn business, and will be expanding there for years to come. There is no real competitive threat nor will there be. So while near-term weakness is the story, and the stock is a wee bit expensive in that light, it’s a great long-term play.
Rather than buy FCFS stock, this is a perfect opportunity to sell naked puts. As of this writing, FCFS stock is at $50.34. The last trade for the March 50 Put printed at $2.55. That’s about 5% for six-week holding period, or around 42% annualized. Sell one contract for $255 in income to bring you to $589 total between DTV and FCFS.