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.
Jack in the Box Inc. (NASDAQ: JACK) came out with better-than-expected earnings on Thursday.
Robert Derrington, Wunderlich Securities senior restaurant analyst, was on CNBC recently to discuss the rental revenue stream of the company and to share his outlook for the stock.
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Rent Revenue Is An Enabler
“Rental revenue stream for the company, which adds an underlying level of cash flow to the company that’s grown to almost 30 percent of its cash flow at this point,” Derrington said. “So that really enables them to not only keep their earnings relatively stable and growing, as well as great cash flow to be able to return to investors either through their increased dividend or share re-purchase program.”
Different Than McDonald’s
On the kind of rental arrangement Jack In The Box has with its franchisees, Derrington said, “Jack's is a little bit different than a typical let’s say McDonald’s. There is this, I call it a asset-like program in that they control the real estate, they don’t own it and so they don’t have that much capital involved or tied up in that.”
He continued, “However, they essentially charge the franchisees 9 percent of their sales. There underlying cost is roughly 6 percent. So, they essentially get a spread on that and the good news is as franchise comps increase, so to does their revenue, but the cost factor actually levels down as a percent.”
Outlook
Derrington was asked if Wunderlich likes Jack In The Box. He replied, “We do, especially today [Thursday] it’s providing us an opportunity.”
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.