BED BATH & BEYOND: Delayed Fireworks 2023 (+16%)

How to fight gravity, hold bags and resurrect

Jan 27, 2023

White Collar must be satisfied with sixteen percent.
Firecrackers must abide by the law of gravity.
Carol Flaton must flatten the stock price.

1. Recap Situation

We elaborated on the Last Short Squeeze, Betrayal by Dilution, and Random London Destructions. We've compared the briefcase lawyer to the gunman and now find that White Collar can't even crack the sixteen percent mark. What a trade you can’t refuse. And the Queen of Queens only knows what the gunslingers will pocket.

Check out the original BrainDozer below.

MacroDoζer

BBBY: Delayed Fireworks 2023

Executive Summary Short squeeze vs. long pump. We rocket, orbit, dilute: when the briefcase lawyer trumps the gunman. Are store closure lists more powerful than gravity? We might find out at The City’s next paint party. 1. Why Do I Care Right Now? If this is the ninth time in twenty-four months that a short squeeze or long pump has hit you, realize that this may be your last chance to dump additional shares to old-fashioned short sellers or high-rolling retail rebels…

2 years ago · 5 likes · Juri von Randow

2. Why Now?

Delayed fireworks we have. Most crackers are already coming down fast, burned to ashes as they usually do. We didn't expect such a sudden default notice from JPMorgan and a public statement that a debt restructuring under the U.S. Bankruptcy Code is now on the table as we write.

Carol Flaton has more than thirty years of experience in the restructuring of distressed situations and has just joined the Board as an independent consultant. This is neither good news nor bad news for the current shareholder. However, while the banks will optimize their overall positions if she chooses to discharge the company's debt through a bankruptcy filing - an excellent opportunity for a second, debt-free life - shareholders will be left holding their almost empty bags.

We are not in the gambling business; our strategy is to discover events with high implied volatility that will settle in specific ranges with favorable risk-reward setups. Bed Bath & Beyond, as far as we can fortune-tell, will not settle in any range anytime soon and could very well be settling down close to zero. We're out.

BBBY: Sharp Price Decline and More Volatility to Come — *MacroDoζer, TradingView*

3. Trade Execution

3.1 Trade Entry - Jan 12, 2023

We were filled at 1.07 and 1.15. We use the mean value of 1.11 to calculate the return on equity.

Total: 1.11 Credit.

BBBY: Pay-Out Graph Short Straddle (Risk-Defined Broken Wing)) — *MacroDoζer, tastyworks*

3.2 Trade Exit - Jan 26, 2023

Total: 0.97 Debit.

BBBY: Closing Pay-Out Graph - Long Straddle (Return-Defined Single Wing) — *MacroDoζer, tastyworks*

The absolute return on this trade is

1.11 - 0.97 = 0.14

The equity at risk was 0.87, resulting in a return on equity of

0.14 / 0.87 = 16.1%

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