Posted on October 20, 2022
Kohl’s (NYSE:KSS) is an old-line department store that once offered a wide range of yummy comestibles, but now peddles mostly clothes.
The problem facing Kohl’s is rather a nice one – it’s fallen too far, too fast and is due for a bounce.
Yet, so have many other stocks.
So what makes KSS different?
For one, her options table.
A close look reveals a number of beautiful strategies emerging in a single month — one of which especially caught our attention.
And could yield a filthy rich 1462%.
And all we require is a $1.51 move in the underlying to step out like Bill Gates in all his Satan-worshipping glory!
Let’s start our discussion with fundamentals…
Good, too, is the company’s recent end-of-year promotional package, which is both comprehensive and enticing enough – in our view – to drive more shoppers into stores and to increase their respective basket sizes.
Now the chart –
Technically, we have…
And with that, we trade!
Like this –
A Jew and His Gold recommends you consider selling the KSS November 18th 30/27.50 PUT spread* for a credit of $1.19 (3.05/1.86) and buying the KSS November 18th 27.50/30 CALL spread** for $1.35 (2.94/1.59). Total debit on the trade is $0.16.
Rationale: 1462% is our maximum gain ($2.34 on just $0.16 spent).
Max loss is $2.66 (difference between the PUT strikes plus the initial debit).
Breakeven arrives at $28.91, just $0.42 (1.4%) above the stock’s current price.
The full 1462% is pocketed with a rise of $1.51.
And given the current volatility, that could transpire by week’s end.
We’ve got a full month to accomplish that move – and though, under normal circumstances that might be considered cutting it close, in the current market, we don’t believe it is.
All the same, we’re labeling the trade SPECULATIVE, given expiry arrives in exactly 30 days.
Many happy returns!
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