It’s well-known that Americans tend to overindulge a bit during the year-end holidays. Thanksgiving is commonly believed to be the day with the highest average calorie intake of the year. The Calorie Control Council estimated that Thanksgiving dinner alone might be 3,000 calories . Those caloric excesses during the holidays often lead to New Year’s resolutions to get fit, which is why Planet Fitness (PLNT) also made this year’s holiday stock shopping list. With a differentiated value proposition, an asset-light franchise structure, and a “broad” addressable market, PLNT’s long-term growth story is solid. Premium gyms continue to raise prices, while boutique studios struggle with post-pandemic churn. All this while Americans struggle not only with their weight but also with their bills. Signs of consumer financialstress are evident not only in surveys of anticipated holiday spending but also in auto loan and credit card delinquencies and cash balances in lower-income households. In this area, Planet Fitness is winning on affordability. “A Gym and Fitness Club for Everyone”, memberships start at just $15 per month, and the Judgement Free Zone branding continues to attract first-time gym-goers — an underserved demographic. The franchise model is a powerful source of operating leverage. Franchisees fund the majority of new club openings, while Planet Fitness collects royalties and fees that generate high-margin recurring revenue. This model enables rapid domestic and international growth without the balance-sheet intensity that burdens competitors. As new clubs ramp and mature, corporate margins expand, and cash flow becomes increasingly predictable. Think of it like the franchise world’s fitness counterpoint to McDonald’s — which would make an interesting barbell trade incidentally. The resistance some investors might offer is that the stock istradingvery close to all-time highs, net of positive earnings results earlier this month. At about 31x next year’s estimated adjusted earnings per share, the stock is reasonably priced given 11% topline and 17.5% bottom line growth estimates. The trade A call spread risk reversal lets an investor participate in incremental upside, while only facing the risk of owning the stock at the price from which it recently jumped post-earnings. Note that the bid/ask spreads of Planet Fitness options can be a bit wider than they are for options on larger companies whose options trade larger volumes; thus, it is important for an investor to use limit orders on spreads like this and “walk” the limit price up or down in increments to ensure the best possible fill. For example, the January 97.5/115/125 call spreadrisk reversal was $0.50 debit bid vs $1.60 debit offer, or $2.10 wide. One would pay $0.50 to sell the call spread and buy the downside put, or $1.60 to buy the call spread and sell the put — our desired structure. In situations like these, one can find the midpoint of the bid/ask spread, which is ~$0.55 debit, and enter it as one’s limit order. If it doesn’t execute after a minute or two, raise the limit by the minimum increment. If the minimum increment is $0.05, for example, one would raise one’s limit from $0.55 to $0.60. Again, if it fails to get a fill, then increase the limit by the nickel increment again — thus “walking” the limit price up. Be sure to give yourself a minute or two. Assuming the stock price isn’t moving around sharply, this extra step and a little patience will be rewarded with better fills. DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
