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.
Green Dot Corporation (NYSE: GDOT) gained more than 30 percent Tuesday after it renewed a contract to manage Wal-Mart Stores, Inc. (NYSE: WMT)'s pre-paid debit cards.
The debit card services company also announced a $150 million stock buyback program.
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Despite Tuesday's gains, Green Dot shares remain off by 0.5 percent year-to-date. It traded recently at $20.13, up $4.82 (31.5 percent).
Susquehanna's James Friedman maintained a Neutral rating and $18 target on Green Dot, calculating that Green Dot's commission will rise to 6 percent under the new contract, from 4 percent earlier.
Friedman expects the higher commission will result in a gain of 200 basis points to Green Dot's adjusted earnings margin before interest, taxes, depreciation and amortization.
Business with Wal-Mart accounts for about 30 percent of Green Dot's revenue and the contract was extended for a period of five years.
Green Dot founder and Chief Executive Steven W. Streit reportedly confirmed Friedman's calculation that Wal-Mart agreed to a 6 percent increase in Green Dot's commission.
"That's a fair piece of math," Streit said in a conference call, according to PaymentSource.com.
Streit, a former radio disk jockey who founded Green Dot in 1999, has sought to diversify the company's revenue stream away from Wal-Mart.
Streit told the Los Angeles Times earlier this year that in 2010, Wal-Mart "had to be 60 percent of our revenue" versus about 30 percent currently.
Green Dot went public in 2010 and its shares are since down by more than 50 percent.
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.