27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
Shares of Huttig Building Products Inc. (NASDAQ:HBP) increased by 96.72% in the past three months. Before we understand the importance of debt, let's look at how much debt Huttig Building Products has.
Huttig Building Products's Debt
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Based on Huttig Building Products’s balance sheet as of August 4, 2020, long-term debt is at $125.60 million and current debt is at $1.70 million, amounting to $127.30 million in total debt. Adjusted for $1.80 million in cash-equivalents, the company's net debt is at $125.50 million.
To understand the degree of financial leverage a company has, investors look at the debt ratio. Considering Huttig Building Products’s $288.20 million in total assets, the debt-ratio is at 0.44. As a rule of thumb, a debt-ratio more than 1 indicates that a considerable portion of debt is funded by assets. A higher debt-ratio can also imply that the company might be putting itself at risk for default, if interest rates were to increase. However, debt-ratios vary widely across different industries. For example, a debt ratio of 35% might be higher for one industry, whereas normal for another.
Why Debt Is Important
Besides equity, debt is an important factor in the capital structure of a company, and contributes to its growth. Due to its lower financing cost compared to equity, it becomes an attractive option for executives trying to raise capital.
However, interest-payment obligations can have an adverse impact on the cash-flow of the company. Equity owners can keep excess profit, generated from the debt capital, when companies use the debt capital for its business operations.
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.