NEW DIRECTIONAL PUT PLAYS
Kohl's Corp. - KSS - close: 50.75 change: -0.57
Stop Loss: 52.25
Target(s): 47.00, 45.50
Current Option Gain/Loss: Unopened
Time Frame: 3 weeks
New Positions: Yes, see trigger
Why We Like It:
After Tuesday's bullish breakout higher in the stock market's major averages I am reluctantly bullish on stocks in general. However, the retailers and shares of KSS have been underperforming. Plus, the month of January had terrible weather for a large portion of the country, which should have negatively impacted same-store sales figures. Most of the major retailers will announce their January same-store sales numbers tomorrow. Analysts expect KSS to see +2.4% growth. If they disappoint then KSS will likely breakdown under support at the $50.00 mark.
I am suggesting a trigger to buy puts at $49.75. If triggered we'll use a stop loss at $52.25. Our exit targets are $47.00 and $45.50. We want to close this trade before KSS reports earnings in late February. I'm suggesting March puts but more aggressive traders could use February puts.
NOTE: My biggest concern is that KSS only sees a brief trade under $50.00 to trigger some stops and then rebounds sharply. Let's keep our position size small.
Trigger @ 49.75
- Suggested Positions -
Buy the March $50 PUT (KSS1119O50) current ask $1.40
Entry on February xxth at $ xx.xx
Earnings Date 02/24/11 (confirmed)
Average Daily Volume = 4.9 million
Listed on February 2nd, 2010