July 6^th, 2022

The Company

Clarus Corp (CLAR) designs, manufactures, and distributes outdoor equipment and lifestyle products. Apparently, they have a management team that is very good at acquiring and developing brands. CLAR Management uses a roll-up strategy to grow their company, which has been successful to-date.  

Like all retail right now, the company appears somewhat “cheap.”

However, if management can continue to be successful with the  "Buy & Grow" strategy then it’s really cheap. And has the potential to explode higher.

Now, CLAR is only a $750 million company that no one has heard about. But someone is paying attention!

Over the last month, I’ve seen the accumulation of over 86,000 options come into the market. On a notional value, that’s $180 million… or 24% of the company in options.

This would trump the Top 3 holders combined.

Open Interest 

This is the CLAR Open Interest board below. You can clearly see where the big volume has come in.

Now, let me show you the detail of how we got here…

December $22.50 Calls

This buyer had already started accumulating Calls in early June. There is 12,000 Open Interest when he started getting bigger in size:

• June 13^th : Buy 5,000 December 16^th $22.50 Calls $2.05 … ($18.39)
• June 14^th : Buy 7,000 December 16^th $22.50 Calls $1.90 … ($18.09)
• June 21^st : Buy 8,000 December 16^th $22.50- $30 Call Sprds $1.54 … ($17.79)

November $20 Calls

With the stock lower, he starts buying November options:

• June 21^st : Buy 8,000 November 18^th $20 -$25 Call Sprds $1.55 … ($17.79)

December $20 Calls

And continues adding to December Call Spreads that day and over the next week:

• June 21^st : Buy 10,000 December 16^th $20 -$25 Call Sprds $1.60 … ($18.11)
• June 22^nd : Buy 25,000 December 16^th $20 -$30 Call Sprds $2.61 … ($18.85)
• June 27^th : Buy 7,000 December 16^th $20 -$25 Call Sprds $1.88 … ($19.13)
• June 28^th : Buy 6,000 December 16^th $20 -30 Call Sprds $2.73 … ($18.81)

However, by the end of the week our buyer decides that he does not want to be short the $25 Calls.

He buys back to close 17,000 December 16^th $25 Calls on the 28^th and 29^th.

And he buys back to close 8,000 November 18^th $25 Calls on the 27^th

February $20 Calls

As the stock creeps higher, he wanted a little more time and rolled out his Call Spreads from December to February. Notice that he doesn’t want to be short any of the December $30 Calls anymore and starts to buy them back.

• June 30^th : Buy 15,000 February 17^th $20 -$30 Call Sprds $2.95 … ($18.89)
• June 30^th : Sell to Close 15,000 December 16^th $20 -$30 Call Sprds $2.30 … ($18.89)
• June 30^th : Buy to Close 15,000 December 16^th $30 Calls $1.40 … ($18.89)

December $30 to $40 Calls & February $30 Calls

On Tuesday, this person no longer wanted to be short the upside $30 Calls. He wanted more room, so he bought them back and sold only the December $40 Calls:

• July 5^th : Buy to Close 7,500 December 16^th $30 Call $1.65 … ($19.58)
• July 5^th : Buy to Close 15,000 February 17^th $30 Calls $2.00 … ($19.58)
• July 5^th : Sell 22,500 December 16^th $40 Calls $0.40 … ($19.58)

The Trade

Clearly, there is a big buyer in the name here who will likely have to file at some point.

In addition, I looked at the sec.gov files and also saw that the Chairman Warren Kanders owns 20% of the company. So, most of the company is owned by institutions and insiders.

Earnings are due in the first week of August.

With another earnings due in November, this trade should get us a very good look at the name:

Buy 1 CLAR November 18^th $20 Calls $4.30
Sell 1 CALR August 19^th $25 Calls $1.00

Net Premium is $3.30.

Using the actions by our buyer, the Target Stock Price is $32-$35.00. Also, because he is buying time it does not appear like there is something imminent happening in the next 4 weeks (besides earnings) that will move the stock 30% higher.

If CLAR explodes >$25 in the next 4 weeks, we will make about 50-75%.

If not, we are in the CLAR November $20 Calls at a great price right behind this huge buyer.