Papa John’s International (NASDAQ:PZZA) stock investors have not had a great 2018 so far; however, people may still consider adding the company to their portfolio for the rest of the year. Specifically, there are three bullish plays in PZZA stock that I want to share with you, as each play could lead to impressive profits.

Year-to-date, Papa John’s shares are down about 11%; the PZZA stock price has indeed fallen more than 30% over the past 12 months, mostly due to the negative media coverage around the drama with founder and former CEO/Chairman John Schnatter, management’s mixed messages at quarterly calls as well as falling sales and revenues. Papa John’s now ranks fourth among the most popular pizza brands in the U.S., dropping from number three in 2017.

Papa John’s International operates in Foods & Beverages sector under Fast Food Eating category. Papa John’s biggest competitors include KFC and Pizza Hut — subsidiaries of YUM! Brands (NYSE:YUM) — as well as Dominoes (NYSE:DPZ) and McDonald’s (NYSE:MCD). Although it is a highly competitive environment for PZZA stock, pizza as a fast food item scales well internationally. Many analysts still see global growth opportunities for most leaders in the sector.

During the Q2 earnings call of Aug. 7, Papa John’s released mixed results while the new CEO Steve Ritchie outlined the management’s strategic priorities regarding more efficient operations, improved marketing, increased value perception and better utilization of data and analytics.

Although it is too soon to tell whether the damage-control efforts and strategic initiatives will pay off in a sustained manner, August and September have seen the PZZA stock price stabilize and build a base from which the stock can move higher.  On Sept. 26, Papa John’s surged about 8% higher following reports that Mr. Schnatter, who already owns approximately 30% of the company, is raising capital to buy PZZA to take it private.

In August, Papa John’s International also declared a quarterly dividend of 22.5 cents per share, payable on Aug. 24, to shareholders of record on Aug. 13, 2018. The next quarterly dividend declaration is expected in early November with a dividend yield of around 2%.

PZZA stock will release Q3 earnings on Oct. 30. I believe that a preemptive bullish move before the release of the earnings would be in order for investors who also think better days are ahead for the stock either due to better management or even due to the company going private soon.

Those investors who pay attention to moving averages should note that the technical message has improved to a “buy,” while oscillators are giving a wider range of “neutral-to-buy” readings. Short-term support for PZZA is first at $49.20 and then at $46; meanwhile, short-term resistance in Papa John’s International stock is first at $52.30 and then at $55. PZZA’s 52-week price range has been $38.05 (Aug. 8, 2018)-$ 73.51 (Oct. 2, 2017). Depending on individual portfolio allocations and risk/return profiles, here are the three types of trades set up for PZZA stock. (Prices are based on Papa John’s International stock’s closing price of $50.15 on Oct. 2.)

Three Bullish Strategies on Papa John’s Stock

1. Buy 100 shares of Papa John’s International stock at a limit price of $50.15. You should expect to hold this long stock position for up to one to six months for an approximate 6%-8% gain. You may consider placing a stop loss at about 3% below your entry point.

2. Use an in-the-money (ITM) covered call covered call, whereby you would buy 100 shares of Papa John’s stock at a limit price of $50.15 and, at the same time, sell a PZZA Jan 2019 $47.50 call option, which currently trades at $5.72. The $47.5 option is slightly ITM, offering more downside protection in case of volatility and a decline in PZZA stock, especially around the earnings call.

This call option would stop trading on Jan. 18, 2019 and expire on Jan. 19.

Assuming you would enter this covered call trade at the closing prices on Tuesday, at expiry the maximum return would be $307 (i.e., ($5.72 – ($50.15-$47.50))*100), excluding trading commissions and costs.

An ITM covered call’s maximum profit is equal to the extrinsic value of the short call option. The trader realizes this gain as long as the price of PZZA stock at expiry remains above the strike price of the call option (i.e., $47.50).

At expiry, this trade would break even at a PZZA stock price of $44.43 (i.e., $47.5-$3.07) excluding trading commissions and costs.

3. Sell the Jan 2019 $47.5 put option with a limit price of $3.35 — its closing price on Oct. 2.

This put option would also stop trading on Jan. 18, 2019 and expire on Jan. 19.

Assuming you enter this put selling strategy at the closing prices it had on Tuesday, the upside is that you keep the premium as long as Papa John’s stock closes above $47.50 when January options expire (excluding trading commissions and costs).

The downside is that if PZZA stock trades below $47.50 ahead of expiration, you could be assigned 100 shares for each sold put at the cost of $47.50 per share.

At expiry, this trade would break even at a PZZA stock price of $44.15 (i.e., $47.50-$3.35).

The Bottom Line on PZZA Stock

I believe a rebound in Papa John’s stock is coming. However, as prudent investors, it is always crucial to maintain a clear risk/return profile. Thus, if the rebound does not happen, a test of the previous lows and toward the low-$40’s level could be the next leg down.

As of this writing, Tezcan Gecgil did not hold a position in any of the aforementioned securities.