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What’s going on with Purple Innovation?

Large volume spike on 9/10 piques Kyle’s interest.

What is Purple Innovation?

Purple Innovation Inc. (PRPL) is a brand that focuses on comfort solutions. You may have seen their ads for the Purple Mattress or Pillow designed to cradle and cool the body. This stock popped onto my radar several months ago when it was trading near an all-time high while also experiencing heavy volume. I bought a couple of call options in July and flipped them a few days later for a nice little profit. Unfortunately, I went back to the well and was burned after the meteoric rise ran out of steam.

Fast forward to September 10, 2020. I still have Purple Innovation Inc. in my watch list since I’ve stuck myself with several worthless stock calls. So imagine my surprise to see a HUGE jump in the volume of shares traded, 4 times the average daily volume, less than an hour into the day’s session! I checked the company news to see if anything was released that might have contributed to this.

The News

 I saw that on September 9th Purple Innovation Inc. announced a secondary offering of 11.8 million shares, but on September 10th, that offering was priced at $18.50, nearly $1.50 less than where the stock opened that day. If anything, I thought that should cause a drop in price…  

The only other piece of news that seemed relevant was released right before the opening bell, announcing that the founders were leaving the company. Was the prospect of the original founders leaving the company the cause behind the renewed interest in this company?

All this seems strange, but I like to throw some money into a stock when I see a large jump in volume that I can’t make sense of. I bought several October 16 calls with a strike price of $25 to see where this goes, and will provide an update in the future as the picture with PRPL becomes clearer.

Trade Log:

09/10/2020  
Bought: PRPL Oct 16 $25.0 Call @$0.75

9/30/2020
Sold 60%: PRPL Oct 16 $25 Call @$1.50

10/16/2020
Exercised remaining contracts

10/21/2020
Closed Position: Sold at $30.75


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