NEW DIRECTIONAL CALL PLAYS

Target Corporation - TGT - close 56.06 change +0.48 stop 52.10

Target Corporation (Target) operates Target general merchandise stores with an assortment of general merchandise and food items. During the fiscal year ended January 30, 2010 (fiscal 2009), the Target stores also included a deeper food assortment, including perishables and an offering of dry, dairy and frozen items. In addition, the Company operates SuperTarget stores with a line of food and general merchandise items. Target.com offers an assortment of general merchandise, including various items found in its stores and a complementary assortment, such as extended sizes and colors, sold only online. It operates in two segments: Retail and Credit Card. The Retail segment includes all of its merchandising operations, including its general merchandise and food discount stores in the United States and its integrated online business. The Credit Card segment offers credit to qualified guests through its branded credit cards, the Target Visa and the Target Card (collectively, REDcards). (source: company press release or website)

Why We Like It:
TGT is approaching a major trend line from that started on July 8th also converges with a key support level (see dashed line on chart). The stock's 50-day SMA is also just below which should also provide support if TGT breaks any lower than this. There is also a prior support/resistance area just below which gives us a good reference point to place a stop at $52.10. TGT is also a defensive play that could do well if the overall market continues its decent. I suggest readers take advantage of any pullback to $54.80 to buy June $57.50 calls. Our target is $58.00. Our time frame is a couple of weeks. Target reports earnings on May 20th so we plan to be out of the trade prior to this date. In the after market TGT is down about 50 cents. If TGT trades down near our trigger and reverses we will initiate positions.

Suggested Position: Long JUNE $57.50 CALL if TGT trades near $54.80, current ask $1.53, estimated ask at entry $1.05

Annotated chart:

Entry on May xx at $xx
Earnings Date May 20, 2010 (unconfirmed)
Average Daily Volume: 5.2 million
Listed on May 5, 2010