NEW DIRECTIONAL PUT PLAYS
Sears Holding Corp. - SHLD - close: 35.46 change: -1.25
Stop Loss: 38.05
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see below
Why We Like It:
SHLD is in the services sector. The company is a specialty retailer with
about 2,000 large retail stores under the Sears and Kmart brand names. Shares of SHLD plunged last Friday as the market reacted to the company's earnings warning released the night before. SHLD expects same-store sales to fall -7.4% for the quarter and forecasted a larger loss than Wall Street expected.
The selling continued today with a -3.4% decline and a close at two-year lows. We strongly suspect that this down trend continues. Readers may want to buy puts now but the $35.00 level could be potential round-number support. Therefore we're listing a suggested entry point to buy puts at $34.85. If triggered our target is $30.25. Please note that traders may want to use small positions. There is a high amount of short interest. The most recent data listed short interest at 54% of the 50.7 million share float. That could spark a short squeeze if the stock were to suddenly move higher.
Trigger @ 34.85
- Suggested Positions -
Buy the MAR $30 PUT (SHLD1422o30) current ask $2.01
Entry on January -- at $---.--
Average Daily Volume = 2.2 million
Listed on January 13, 2014