I know, I know, people think I’m the embodiment of “cute”. But in truth, I’m not a big fan of “cute” things, particularly when companies try it. That’s why I just shook my head when Kraft Heinz (KHC) announced last week that it would offer a “Maxwell Apartment” rebrand for a bargain-priced year’s supply of coffee. It’s a nod to the people who rent rather than own their homes. But wouldn’t “Maxwell Pad” sound better? Unfortunately, “cute” didn’t help KHC’s price much. It’s hovering around its lowest price in five years, and has been stuck in a range for the past two months. Its food offerings have fallen out of favor with a health-conscious public, and its plans to split into two companies next year has been met with a “meh”. KHC’s next earnings are coming at the end of October, and the stock might stay in that range until then. That might be enough for a trader to consider a neutral strategy. KHC’s IV has been rising, and its 26% overall IV and 49% IV rank make its options good candidates for short premium trades. If you think KHC might trade in a range for the next couple of weeks and don’t want to take risk through earnings, the short strangle that’s short the 25 put and short the 27 call in the October weekly expiration with 21 DTE is a neutral strategy that has an 80% prob of making 50% of its max potential profit before expiry, and that generates $2.46 of positive daily theta.
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