by John Jagerson and Wade Hansen | December 24, 2013 8:31 am
We’ve opened a new bullish trade on Deckers Outdoor (DECK). We watched the recent Finish Line (FINL) and Nike (NKE) earnings reports with a lot of interest as they relate to DECK stock. Combined with a stellar GDP release (driven by consumer spending), there seems to be mounting evidence that retail stocks are undervalued. Both FINL and NKE had great reports and surprised investors. NKE sold off a little, but there were other issues that stunted its potential upside.
DECK stock shares are more volatile than other footwear companies — but that can be a good thing. The stock is currently forming a nice bull-flag during a colder-than-expected winter in North America. The best way to take advantage of DECK’s volatile nature is with a call options trade.
Use a limit order to ‘buy to open’ the DECK February 85 Calls for a maximum price of $4.35.
To play a move up in DECK stock, we are getting in just before the breakout, so there is some possibility that prices will continue to trend a little flat in the near term. However, we feel that the risk is worth the opportunity as investors continue to look to retail stocks for growth opportunities next week.
The bid-ask spread on DECK options is a little wide, so make sure you use a limit order to open the trade. Otherwise you are asking the market to give you the worst price possible.
InvestorPlace advisors John Jagerson and S. Wade Hansen are co-founders of LearningMarkets.com, as well as the co-editors of SlingShot Trader, a trading service designed to help you make options profits by trading the news. Get in on the next trade and get 1 free month today by clicking here.
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