Retailers Say “Are You Ready To Rumble?”
mso-ansi-language:EN-US;mso-fareast-language:EN-US;mso-bidi-language:AR-SA”>The
market has bounced back a bit today. The Nasdaq is up slightly to
2927. The industrials are up almost 100 to 10565. Some of the
retailers are jumping up after strong sales this past holiday weekend. Target
(
TGT |
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PowerRating) is up to almost 30.
Wal-Mart
(
WMT |
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PowerRating) is up to 48 3/4, up about 8% today. The stock
has been beaten up lately and it still has a way to go to hit the six-month high
of 63. Option volatility in December and January is 41 and 43
respectively. This is down from the 50 level of a month ago. For traders who think the strong weekend retail sales will continue and that WMT can make it up
to 55 sometime in January, they may look at the January 50-55 Bull Call
Spread for a 1 1/2 debit. This spread would expand to $5 at January
expiration with the stock at 55 (up 12% from today’s levels).
If they like the stock, but don’t see it going higher than 51 before expiration,
they could take a look at selling the Dec 47 1/2 – 50 Put Spread for a 1 3/8
credit. If the stock goes to 50 or higher, they will make the entire
credit. The maximum risk is 1 1/8 (stock at 47 1/2 or lower).
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