This year, if you started shopping on Black Friday, you were actually behind the curve as thousands of retail stores opened their doors on the U.S. Thanksgiving holiday Thursday. As consumers shop till they drop, who’s going to win the shopping showdown?
Big names like Wal-Mart (NYSE:WMT), Best Buy (NYSE:BBY), J.C. Penney (NYSE:JCP) and Target (NYSE:TGT) are always bandied about, but my extensive scans scour the entire universe of stocks to identify the best candidates for options trades and they uncover stocks you might otherwise overlook. My latest results brought up a ton of potential contenders, but I handpicked one long-side call option and short-side put option for the retail realm this Black Friday.
Dillard’s (NYSE:DDS) operates higher-end department stores in the southwest, southeast, and midwest regions of the United States with 304 locations. In the past three quarters, it’s given off double-digit positive earnings surprises, so the buying boost from this holiday season should only augment that.
Buy the DDS Feb 95 Call options. After entry, take profits if the stock price hits $88.50, or if the call trades at $2.70. Stop-loss parameters are important to me, so exit if the stock price closes below $79.60 or the call’s value drops to 70 cents.
Now, for every winner in the retail game, there is at least one loser, so don’t overlook an opportunity to make a quick buck from a put option.
Shoe manufacturer Crocs (NASDAQ:CROX) enjoyed meteoric success and traded in the $70s, only to get whacked down to current levels today around $12. Earnings estimates for this quarter are at 0 cents per share – 0 cents per share.
While a lot of that drop is priced in, my signals revealed there’s an additional down current ahead. Buy the CROX Jan 11 Put options. After entry, take profits if the stock price hits $10.7, or the puts trade at $1.10. Again, knowing when to get out and cut your losses is just as important as knowing when to get in, so exit if the stock price closes above $12.90 or the options trades below 30 cents.
Ken Trester is editor of the popular Maximum Options program. Trester has been trading options since the first exchanges opened in 1973 with a winning streak that goes back to 1984 with money-doubling average annual profits since 1990.