This morning, I’m recommending a bullish put write on Beyond Meat, Inc. (NASDAQ:BYND).
After the Federal Open Market Committee (FOMC) announced another cut to the target overnight interest rate, this time adjusting it to a range of 1.50% to 1.75%, the market continued pushing higher. For the second time this week, the S&P 500 has set a new all-time closing high.
As my regular readers know, two of my trading rules are “don’t buck the Fed” and “don’t buck the tape.”
Right now, both the “tape,” or the action on the market, and the Fed are telling me it’s time to be bullish, and with a put write on BYND, we can earn a little income while the market absorbs the latest rate cut.
BYND’s Fundamentals Look Solid
At a time when initial public offerings (IPOs) are failing before they even begin, BYND has surprised me. After its IPO, which was price at $25 per share, the stock rose to a high of $239.71 before finally coming back down to its current levels.
While the $80 to $90 range is a long way away from its all-time highs, it still means BYND has paid off for those initial investors. Now that the IPO lock-up period is over, investors are free to sell their share and collect their profits.
The increase in trading volume does seem to have hurt share prices, but BYND’s fundamentals look solid. The company reported earnings, and for the second time in a row, it beat expectations.
The company is also doing more business with big names like McDonald’s Corporation (NYSE:MCD) and Yum! Brands, Inc. (NYSE:YUM) — owner of KFC and Subway.
Finding a Bottom After a Gap Lower
As mentioned above, the end of the IPO lock-up period had consequences for BYND. Even with its strong earnings performance and positive guidance for the future, it gapped lower on Tuesday, after the period ended. You can see on the chart below, it tapped $80 per share on Tuesday.
Daily Chart of Beyond Meat, Inc. (BYND) — Chart Source: TradingView
But BYND pushed higher yesterday, and I think there is a good chance it has found support at around the $80 level — at least in the short term.
Regardless of its long term strength, there’s no denying that BYND has a lot going for it. A put write that expires within the next few months is a perfect way to trade the situation.
Sell to open the BYND Dec. 6th $50 put at about $0.35.
Note: Be sure you are opening the weekly BYND options that expire on Friday, Dec. 6, 2019.
About Naked Put Writes
If you are holding the option at expiration and the stock is trading below the $43 strike price, you will be put the shares.
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