Examining Eddie Lampert's portfolio: Sears Holdings

Sears Holdings Corporation (NASDAQ: SHLD) opened at $168.05. So far today the stock has hit a low of $167.57 and a high of $169.91. As of 10:50 a.m., SHLD is trading at $169.04, up 0.97 (0.6%).

After hitting a one year high of $195.18 in April, the stock has been sliding over the past two months. The stock is continuing a rally that began yesterday afternoon as retail stocks were boosted by a Kohl's (NYSE: KSS) upgrade and Best Buy's (NYSE: BBY) expansion, buyback, and dividend hike trifecta. Shares of SHLD make up 71.44% of Chairman Eddie Lampert's portfolio. Lampert is a student of Warren Buffett's who believes in investing in a stock for long term gains, and also investing in a company that is undervalued but ripe for a turnaround. This recent dip in SHLD may be a good buying opportunity for investors looking to get in on what this guru investor believes to be a solid long-term performer. Recent technical indicators for SHLD have been bearish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bullish hedged play on this stock, I would consider a September bull-put credit spread below the $140 range. SHLD hasn't been below $140 since September and has shown support around $165 recently. This trade could be risky if retail numbers are soft over the summer, especially with SHLD reporting earnings in the week before August expiration, but the stock would have to fall by 17.3% before we would be in trouble.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: At publication time, Brent Archer neither owns nor controls positions in SHLD, BBY, or KSS.