JTX Follow-up

I previously posted on Jackson Hewitt (JTX) here: http://mevsemt.blogspot.com/search/label/zCurrent%20Holding%3A%20JTX%20Options.

Basically, my thesis was this tax season would either make or break JTX, and this would largely be driven by whether JTX could find a partner to fund their RAL (Refund Anticipation Loan) product.  Further, I knew JTX would need to have their RAL funding lined up before the end of the year, so IMO this made Jan 2011 $2 call options the way to go.  Basically, I likened this to betting on a coin flip where the payout is better than 1:1 (maybe much better).

So here's where we stand: JTX has lined up 90% of its RAL funding and things are looking up.  As a result JTX stock has gone from < $1 at the beginning of December to $1.71 today.  Now the stock needs to go above $2 for me to make any money, but I'm cautiously optimistic this could happen... wish me luck!

PS - this was a very small (and speculative) investment on my part, so it'll really need to pay off big to have a significant impact on my portfolio.  Nonetheless, it's fun to watch!

* As a bit of house keeping I've decided to turn off the "Comments" feature on my blog.  The reason for this is I'd like to try corresponding with my readers more directly - so, if you have any questions/comments/insights/disagreements (especially disagreements as I always like to hear why I might be wrong) about this or another investment please email me directly at mevsemt@gmail.com.

All or Nothing...

Today I placed an order to purchase Jan 2011 $2.00 call options (the contract price is $0.05, my order is for 175 contracts but as of now only 92 have gone through) for Jackson Hewitt Tax Services (JTX). Assuming I get all 175 contracts, my total purchase price should be about $994 including commissions.

JTX is a company in a TON of trouble and is drowning in debt - there is a very real chance they could be bankrupt before the end of the year. The situation is complicated, and I'll try to elaborate in a future post, but ultimately I think there's about a 50/50 chance they'll survive. IF they do make it they're probably worth $3 to $5 per share - which means the options I purchase today could be worth quite a lot.

IMO I'm essentially betting on a coin flip - but I'm only paying $1 for a chance of winning $10.