Sell Alert: Bofi Holding (BOFI)

By Jim Pearce • May 31, 2017

TRADE INSTRUCTIONS
Date: May 31, 2017
Name: Bofi Holding, Inc.
Symbol: BOFI
Type: Close
Limit: Sell at market

TRADE RATIONALE
BOFI closed beneath my stop price yesterday, so I am closing out that position only four weeks after it was opened. We only have a small loss in BOFI – down less than 8% from where we bought it – but the next support level is another 15% below the current price and that is a risk I cannot take.

At this point, I believe BOFI has become a binary proposition; either it will adroitly settle its outstanding legal issues and the stock will jump 25% or more very quickly, or it will end up on the wrong end of a huge judgment and the stock will crater. I have no idea which way it will go, but investors on the right side of out-of-the-money options could realize huge returns on BOFI later this year.

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Rick

05/31/17 ‐ 11:48am ET May 31, 2017 at 11:48am ET

Thanks, Jim – One of the advantages of using options is that my investment is relatively small, and of course the disadvantage is that a small decrease becomes a large percentage loss. Given that my options are 44% under water, I’ll hang out with them until much closer to expiration in October in the hopes that they settle and the stock skyrockets 25%.

Jim Pearce

06/01/17 ‐ 10:26am ET June 1, 2017 at 10:26am ET

That’s what I would do if I were in the same position. The next quarterly earnings report is due the first week of August, well before the October options expire. If there is any progress on the legal front between now and then, you might just make most if not all of that deficit back. I will make a note to check back with you in August after the quarterly earnings are released to see where things stand.

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