Sears Holdings Corporation (NASDAQ: SHLD) opened at $136.00. So far today the stock has hit a low of $135.91 and a high of $139.63. As of 11:00, Sears is trading at $138.20, up $5.10 (3.8%).
After hitting a one year high of $195.18 in April, the stock has been slumping lately, falling to a year low of $128.00 on Friday. Shares are rebounding nicely today after the company announced a $1.5 billion buyback program, even though sales for the company were less than stellar and they lowered their forecast. Technical indicators for Sears are 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 $120 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk and leverage returns. For this particular trade, it's possible to make a 12.4% return in just six weeks as long as Sears is above $120 at September expiration. The company would have to fall by more than 14% before we would start to lose money. Learn more about this type of trade.
Sears hasn't been below $120 at all in the past year and has shown support around $128 recently. This trade could be risky if the retail sector's back-to-school numbers are weak, but even if that happens, this stock is one that has been knocked down so much recently that it could be attractive to value investors.
Brent Archer is an options analyst and writer at Investors Observer. DISCLOSURE: At publication time, Brent neither owns nor controls positions in SHLD.
For a bullish hedged play on this stock, I would consider a September bull-put credit spread below the $120 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk and leverage returns. For this particular trade, it's possible to make a 12.4% return in just 6 weeks as long as Sears is above $120 at September expiration. The company would have to fall by more than 14% before we would start to lose money. Learn more about this type of trade.
Sears hasn't been below $120 at all in the past year and has shown support around $128 recently. This trade could be risky if the retail sector's back-to-school numbers are weak, but even if that happens, this stock is one that has been knocked down so much recently that it could be attractive to value investors.
Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: . At publication time, Brent neither owns nor controls positions in SHLD.
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Reader Comments (Page 1 of 1)
8-13-2007 @ 2:35PM
donna gordon said...
I worked for Sears for 31 years and Ihad stock. never in all those years did the stock go over 90.00 dollars. When it did it split. Why is it now it's over 100.00 dollars when we went with a bankrupt co. like k-mart and it hasn't split? Also when I retired I kept my stock but when it went below $5000.00 instead of contacting me to see if I wanted to buy more they bought it at $3000.00 . I think I should have been notified. Sears needs to loose their ass to Wal-Mart