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MAY - May Department Stores $33.45

May Department Stores (NYSE:MAY) operates six department stores divisions in the United States. The department store divisions are Lord & Taylor; Filene's and Kaufmann's; Robinsons-May and Meier & Frank; Foley's, and Famous-Barr, L.S. Ayres and The Jones Store; and Hecht's and Strawbridge's. May National Bank of Ohio, an indirect subsidiary, extends credit to customers of May's six department store divisions. May Merchandising Company, an indirect subsidiary, works closely with its six department store divisions and merchandise vendors to identify emerging fashion trends and to develop merchandise assortments.

Shares of MAY rallied more than 6% Friday amid rumors that Federated Department Stores is again talking with the chain about a buyout. Apparently, a person familiar with the situation told the Wall Street Journal that "the two sides had resumed negotiations but were some $2 per-share apart on a mutually agreeable deal price." Of course, both companies declined to comment on the talks however a number of analysts are confident that a "deal will get done."

Regardless of the merger speculation, the stock seems comfortable in its new trading range and even the most pessimistic forecasts place the share price no lower than $28-$29. Investors who believe the risk is worth the reward should consider this position. It will not be listed in portfolio summary.

Fundamentals: http://finance.yahoo.com/q/ks?s=MAY&quicken=2

Chart: http://finance.yahoo.com/q/bc?s=MAY&t=6m

Sell Put MAR 30.00 MAY-OF
Current Bid = $0.40 Open Interest = 11353
Potential Profit (5 contracts) = $200
Initial Margin (5 contracts) = $5,165
Return on Investment (max) = 4.5%
Cost Basis in Stock = $29.60
Days to Expiration = 26

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