Smith & Wesson (the company) is on sale!

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SWBI : $10.36 bid
Boring! Almost as bad as watching your CD generate interest.
December 16, 2022 $10 put : 70¢ bid / 80¢ ask. 52 Days to Expiration

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SWBI: $11.34 bid (1531 hours). Dec 16 $10 puts and $15 calls are out-of-the-money. 45 Days to Expiration.

Granted, dividends are not an obligation of a company as are interest payments on a bond, but I do like the monthly dividend of Fortitude Gold Corporation (FTCO). Current dividend yield is 8.495% ($0.48/$5.65). Yippeee!

Here's another gold mining company with a 5% dividend yield: B2 Gold Corp (BTG: $3.14). Being optionable, you can further increase the return by selling covered calls against your shares.

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SWBI: $11.67 bid (1411 hours). Dec 16 $10 puts and $15 calls are out-of-the-money. 35 Days to Expiration.
How exciting!

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Looks like it will be a boring week in the markets. Sold some calls against three positions that expired Friday...whoopee! Not big bucks, but a credit all the same.

SWBI $11.29 bid.
Darn, a struggle to break above $12. Dec 16, 2022 $10 Puts: 24 Days to Expiration

Might as well find something else to do this week: any shooters on this forum that want to actually do some shooting?

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SWBI $12.13 bid
16 December 2022 options: 14 Days to Expiration (almost done!)

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An article by "The Motley Fool"

https://finance.yahoo.com/m/c3c2d47b-7ed6-3798-a391-24bfa4a0c2f4/3-stocks-that-could-soar-in.html

The leading firearm manufacturer is on sale

NASDAQ: SWBI
Smith & Wesson Brands
Today's Change (1.98%) $0.24 Current Price: $12.39

John Ballard (Smith & Wesson Brands): Buying shares of a gun manufacturer might seem controversial, but if you're looking for an undervalued business that could deliver asymmetric returns in a bear market, Smith & Wesson could do the trick.

The company makes firearms ranging from pistols to sporting rifles for law enforcement, military agencies, and individuals, and it's been in business since 1852. Smith & Wesson is the leader in a very fragmented industry with 17% market share. An estimated 30% of American adults own a firearm, but the stock has fallen this year due to lower gun sales, which is a great opportunity to add shares of this solid dividend stock.

After a surge in gun sales during the pandemic, retailers have been reducing inventory as demand returns to pre-pandemic levels. This is expected to continue into 2023, which will pressure Smith & Wesson's revenue and profits, but this is already reflected in the stock's valuation.

The stock's forward price-to-earnings (P/E) ratio is dirt cheap at 6.1 times this year's earnings estimates. The stock price undershoots the value of the company's long-term earning power, especially its history of generating profits through the cyclical swings in demand.

Smith & Wesson is built to handle adversity. The business is debt-free and holds over $100 million of cash on the books. Even with revenue expected to decline by 32% next year, analysts expect earnings per share to come in at $1.64, which would still put the P/E at a lowish 10.

To keep profits up during periods of weak demand, the company uses its manufacturing capabilities to serve third parties, including machining and tooling work. This provides extra revenue during periods of lower gun sales. When gun sales increase, it outsources manufacturing to respond quickly to demand, which leads to another boom in profits.

Income investors will love Smith & Wesson's dividend. The stock's decline this year has brought the dividend yield up to 3.08%, or double the S&P 500 average, based on a low payout ratio of just 13%. The low payout means Smith & Wesson has ample room to raise the dividend payment even with lower earnings, which is another indicator that the stock is undervalued and due for a rebound. 

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Incidentally, SWBI 2Q earnings are due out after the close on 6 December.

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...and down she goes!
https://www.sec.gov/Archives/edgar/data/1092796/000119312522299380/d424635dex991.htm

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SWBI: $9.90 bid.  Imagine that! The December 16, 2022 $10 puts are now in-the-money. Looks like it will be a nail-biter until expiration/assignment (being a phantom trade, we can't know for certain if we would receive assignment before expiration). We still have 9 more days til expiration (remember b/e will be $9.60 a share).

Would be grand to have another 5 grand available for more "cash-secured puts':
Sell 5 January 20, 2022 $10 Puts for 65¢ ($325 relative to $5000 equals 6.5%; 43 days to expiration).

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Well, every hypothetical long position we've entered to date has been a failure. The option premiums received from covered call sales have offset a portion of the drop, but a drop nonetheless. Had we simply purchased the stock w/o covered call sales, we'd be even worse off.
Our Dec $10 puts (reply #32) look to be approaching assignment, so if we do nothing, we will be "put" 500 shares at $10 each ($9.60 after benefit of 40¢ premium). I won't object to paying $9.60 a share for 500 shares at this price point. If we simply purchased 500 shares back on September 9th, we would have paid around $12.50 to $13.

FWIW, I have several "in-the-money" covered calls on several gold mining companies. None have been called away as yet, but it could happen, especially as expiration approaches. It will definitely happen, if these positions expire in-the-money (that is, with the option strike price being lower than the current market price of the stock).

So much fun!