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Sears Holdings Corp (NASDAQ:SHLD) announced Thursday that the company would start selling its well-known Kenmore brand appliances through Amazon.com, Inc. (NASDAQ:AMZN). This is a significant shift in strategy, although it was probably an inevitability. The news hit home-improvement and appliance-resellers like Home Depot Inc (NYSE:HD), Lowe’s Companies, Inc. (NYSE:LOW) and Best Buy Co Inc (NYSE:BBY).
We like the opportunity to profit from a bearish move in BBY for two reasons. First, the stock will be under margin pressure in its appliance business, and it appears that AMZN is building a services arm to compete with BBY’s “Geek Squad.” Services revenue at BBY is already being hammered by low customer satisfaction, and this news is likely to have an additional bearish impact on the company.
‘Buy to open’ the BBY August 52.50 Puts (BBY170818P00052500) for a maximum price of $1.20.
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InvestorPlace advisers John Jagerson and S. Wade Hansen, both Chartered Market Technician (CMT) designees, 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 SlingShot Trader trade and get 1 free month today by clicking here.
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