Before we dive into this week’s covered call idea, we need to clean up a couple positions from the October expiration cycle.
Our PSTG, KTOS and CCJ trades expired for their full profits and we no longer own a position in these stocks.
CPNG and LYFT stocks closed below their strike prices, which means the call we sold expired worthless and we are left with those stock positions. Let’s exit these trades today for a small profit in CPNG and a small loss in LYFT.
To execute these trades you need to:
Sell CPNG Stock
And
Sell LYFT Stock
Moving on …
Coming off a nasty close for the market the previous week, the indexes rebounded this last week as the S&P 500 gained 1.7%, the Dow added 1.6%, and the Nasdaq rallied 2.1%.
The Stock – Celsius (CELH)
Celsius is experiencing a surge in popularity for its sugar-free, vitamin-infused beverages—both sparkling and non-carbonated—which are designed to accelerate metabolism and boost energy.
The company’s “modern energy” drinks have the appeal of having fewer calories than competitors like Monster Beverage drinks, while containing no sugar, preservatives, artificial colors or flavors. And while competitor Monster remains a juggernaut in the energy drink category, Celsius is fast nipping at its heels and continuing to gain market share at Monster’s expense (which declined 1%, to 27%, in Q2), as buyers increasingly pivot from sugar-based drinks to healthier options. To that end, one analyst recently noted Celsius’s offerings are showing up in a growing number of gyms, as well as retailers like Dunkin’ Donuts, Walmart and 7-Eleven.
As for the business, a big part of the appeal here was a distribution deal with Pepsi that was a huge tailwind, though the last few quarters have seen a big growth slowdown due to an inventory adjustment from that consumer giant. But the stock has been strong in recent months because (a) that adjustment seems to be coming to an end, and because of (b) Celsius’s purchase of the Alani Nu brand earlier this year (for a big $1.65 billion), another sugar-free energy drink maker that has a more female-focused audience that’s selling well (Pepsi has also signed up to distribute this brand while boosting its ownership of Celsius to 11%), both of which have helped results. In Q2 the company posted record revenue of $793 million—up 84% from a year ago thanks mostly to the acquisition (Celsius brand revenue was up 9%, though that was a pickup from recent quarters). Earnings of 47 cents a share beat estimates by 23 cents while adjusted EBITDA doubled to $210 million.
The strong quarter was further cemented by Celsius reaching a 17% share of the total U.S. energy drink market, including 43% household penetration, which grew two percentage points year-on-year; beyond the domestic market, international revenue of $25 million jumped 27%. Wall Street sees booming earnings growth from here, with the Q3 report likely out in early November.
Technical Analysis
CELH double-topped in the middle of last year and then crashed and burned, falling from nearly 100 to 22 at its nadir in February of this year. The major volume clue after earnings marked the bottom, with shares gaining steam over time, accelerating higher to 63 after Q1 earnings. A four-week dip to the 10-week line has given way to a nice (albeit low-volume) rebound to new recovery highs. Stop – 54
The Covered Call Trade
Buy Celsius (CELH) Stock at 64, Sell to Open November 64 Strike Calls (exp. 11/21) for $5, or a Net Price of 59 or less
Static Return: $500 per covered call (8.47%)
Breakeven: 59
Covered Call Return (if assigned): $500 per covered call (8.47%)
Please note, the stock and options prices will be moving throughout the day, so these prices are simply an approximation of prices that you should be able to achieve.
However, the important component of this equation is that the stock price paid, minus the premium received via the call sale, equals the approximate Net Price, or 59 or less. (In this case 64 minus 5 = 59. Or another example is you could pay 64.5 for the stock and sell the call for 5.50, which also equals 59.)
For every 100 shares of stock you buy, you can sell 1 call. For every 200 shares of stock you buy, you can sell 2 calls. And so on …
Open Positions
| Stock Name and Symbol | Price Bought | Current Stock Price | Stop | Option - Price of Call Sold | Current Option Price |
| Coupang (CPNG) | 32.45 | 31.5 | 29 | ||
| Lyft (LYFT) | 22.3 | 20 | 18.1 | ||
| Century Aluminum (CENX) | 30.65 | 32 | 24 | November 31 -- $3 | $4.00 |
| Nextracker (NXT) | 85.8 | 89 | 70.5 | November 80 -- $10.80 | $13.00 |
The next Cabot Profit Booster issue will be published on October 28, 2025.
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