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Barchart
Barchart
Mark R. Hake, CFA

Domino's Pizza Stock Is Dirt Cheap, With 30% Potential Upside - What's the Best Play?

DPZ Domino ITM Barchart OTM Domino Pizza

Domino's Pizza (DPZ) stock keeps falling. DPZ is at least 30% too cheap, based on its strong free cash flow (FCF) and high FCF margins. Two attractive plays are to sell short out-of-the-money (OTM) put options with near-term expiration dates, as well as buy long-dated in-the-money (ITM) calls.

DPZ dropped to $294.20 on Friday, Sept. 18, near its 6-month low price of $283.03 on June 23. This was about a month before its July 23 Q2 earnings release.

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