Trade Alert: Top Names + Short Squeeze
A bullish bet on our #1 name from last night, a stock with 24% short interest.
Today’s Top Name Trade: Lemonade
Lemonade (LMND 0.00%↑) was Portfolio Armor’s #1 name last night, and it checks a few boxes for us right now:
Elevated short interest (~24%) adds squeeze fuel if momentum rotates back into high-beta winners.
IV is rich, which lets us harvest volatility rather than overpay for it.
And a quick mea culpa: we tried a short-dated bullish trade on this one in March and lost money on it—even though the stock is up ~61% since then. Right idea, wrong tenor. This time we’re going out to December to give the thesis room and reduce timing risk.
How we’re playing it (high level)
Per our manifesto—Harvest IV. Define risk.
We’re using a defined-risk, credit-financed combo that:
Collects a small net credit up front (we’re paid to place it),
Sets max risk under ~$500 per contract,
Puts our break-even near/just below spot, and
Still gives us asymmetric upside if the name trends or squeezes.
We’ll set GTC exits so we don’t have to babysit it.
Why now? LMND shows up at the top of our system, short interest is high, and sentiment toward momentum has been improving after last week’s wobble. If that tailwind persists, we’d expect LMND to participate—and our structure lets us benefit without paying up for calls.
(Strikes, pricing, and exact mechanics in the subscriber section.)
Today’s Top Names Trade
The stock again is Lemonade (LMND 0.00%↑), and our trade is a combo expiring on December 19th, consisting of these four legs:
Buying the $60 strike call,
Selling the $70 strike call,
Selling the $55 strike put, and
Buying the $50 strike put,
For a net credit of $1.05. The max gain on 1 contract is $605, the max loss is $395, and the break even is with LMND at $53.95. This trade filled at a net credit of $1.25.
Exiting This Trade
My plan:
LMND Call Spread (legs 1 & 2): Open a GTC limit order to exit at a net credit of $4, and lower that price, if necessary, as we approach expiration.
LMND Put Spread (legs 2 & 3): Open a GTC limit order to exit at a net debit of $0.25, and raise that price, if necessary, as we approach expiration.