Following the recent earnings call, Hasbro (HAS) surprised analysts by trimming the cost of the Discovery Communications joint venture and reporting a 5% increase in profits over a year earlier. So far this year HAS is down 9% while its main rival, Mattel (MAT) is up 13%, I expect Hasbro to catch up by year end. Below are two strategies to play the recent earnings which will leave room for a 23% and 32% downside protection from current levels. Keep in mind the lowest price HAS hit was $21.14 during the March market collapse. Both of the below strategies take this into consideration and the price of the stock would need to fall under $20 to realize a loss.For a return of 50% over six months, sell 10 Jan10 Put contracts @ $20 for a premium of .50 cents. The margin requirement would be $2,500.00 less the premium proceeds of $500.00 for a total requirement of $2,000.00. This trade nets $500.00 for a yearly gain of 25% or if entered into today, 50% as there are only 6 months left until expiration. Downside protection of 23%.For a return of 22% over six months, sell 10 Jan10 Put contracts @ $17.50 for a premium of .20 cents. The margin requirement would be $1,950.00 less the premium proceeds of $200.00 for a total requirement of $1,750.00. This trade nets $200.00 for a yearly gain of 11% or if entered into today, 22% as there are only 6 months left until expiration. Downside protection of 32%.
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