Doughnuts and Big Lots

I know my buddy, Jonathan "Heaven and Hell"-er has done some fantastic work on Krispy Kreme Doughnuts (KKD). I've done some great work there too -- but it has been in eating the doughnuts rather than researching the value aspect of the company. My focus today is on the company's earnings and the market's potential reaction. Last quarter, KKD put up some good numbers, but the stock sold off in May. We saw a similar reaction in March with a big selloff on earnings.

It almost seems too easy to play the downside here. The chart is setup for a solid 10% move, but I am actually leaning the other way this quarter as I believe it may be higher. Heller has me believing the turnaround is in effect now and I believe bulls will actually be rewarded this quarter. Still, KKD has to be seen as a lottery ticket into earnings, so I'll stay on the smaller side. My preference would be on the October 7 calls if I can get them filled at $0.45. But that has been a difficult task, so I have bought a half position in the September 7 calls at $0.40....296 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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