In article, “Wal-Mart (WMT) Stuck in a Retail Rut”, we analyzed retail stores for a covered calls stock options strategy. In article, “Retail Investing – Returns Sweet +4% Return in Jan 07”, we selected positions for expiration in March of 2007, and even though the overall stock market was very gloomy, the strategy still returned +0.9, not bad considering the S&P500 index was down over 5% during the same time period.
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The retail sector has reported mediocre results over the last couple months, and a lot of the gloominess can be attributed to bad weather, but the bad weather is now behind us for the year (we hope), and so the retail sector has a bullish look to it.
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We still consider covered calls for retailers to be an attractive strategy, and we searched for potentially lucrative covered calls stock options positions using PowerOptions‘ stock options search tools for stock options expiring in May of 2007 and found the following positions.
| PowerOptions covered call search | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Sym |
Stock Price |
Option Sym |
Expire &Strike |
Opt Bid |
%Dnsd. Prot |
%If Unch. |
%If Assgnd. |
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| SHLD | 182.27 (+2.16) | KDUEQ | 07 MAY 185.0 (57) | 6.10 | 3.3 | 3.5 | 5.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| TGT | 61.47 (+0.24) | TGTEZ | 07 MAY 62.5 (57) | 1.60 | 2.6 | 2.7 | 4.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| WMT | 47.95 (-0.06) | WMTEW | 07 MAY 47.5 (57) | 1.65 | 3.4 | 2.6 | 2.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| JCP | 81.69 (+0.24) | JCPEQ | 07 MAY 85.0 (57) | 1.95 | 2.4 | 2.4 | 6.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The retail covered calls stock options positions found are all out-of-the-money and have potential returns ranging from 2.4% to 6.6% with downside protections ranging from 2.4% to 3.4%. The stock for a covered calls position can decrease and still remain profitable, as long as it does not decrease more than its downside protection.
To realize the maximum return for an out-of-the-money covered calls position, the stock price of the position must increase to or above the strike price of the call option.
Competitors:
Competitors for SHLD include: Target Corp. (TGT), Wal-Mart Stores Inc. (WMT), and J. C. Penney Corporation, Inc. (private).
Competitors for TGT include: Costco Wholesale Corp. (COST), Wal-Mart Stores Inc. (WMT), Kmart Corporation (private), Bed Bath & Beyond Inc. (BBBY), Big Lots Inc. (BIG), Charming Shoppes Inc. (CHRS), Gymboree Corp. (GYMB), Penney (J.C.) Co. Inc. (JCP), Kohls Corp. (KSS), PetsMart Inc. (PETM), Sears Holdings Corp. (SHLD), Stage Stores Inc. (SSI), and Tuesday Morning Corp. (TUES).
Competitors for WMT include: Costco Wholesale Corp. (COST), Target Corp. (TGT), Carrefour SA (private), Autozone Inc. (AZO), Bed Bath & Beyond Inc. (BBBY), Best Buy Co. Inc. (BBY), Big Lots Inc. (BIG), Brown Shoe Co. Inc. (BWS), CSK Auto Corp. (CAO), Circuit City Stores Inc. (CC), Casual Male Retail Group Inc. (CMRG), Conns Inc. (CONN), CVS Corp. (CVS), Dicks Sporting Goods Inc. (DKS), drugstore.com Inc. (DSCM), Family Dollar Stores Inc. (FDO), Foot Locker Inc. (FL), Freds Inc. (FRED), Hibbett Sporting Goods Inc. (HIBB), Penney (J.C.) Co. Inc. (JCP), Kroger Co. (KR), Longs Drug Stores Corp. (LDG), Nash Finch Co. (NAFC), 99 Cents Only Stores (NDN), PetsMart Inc. (PETM), Payless ShoeSource Inc. (PSS), Rite Aid Corp. (RAD), Renters Choice Inc. (RCII), Sally Beauty Holdings Inc. (SBH), Sears Holdings Corp. (SHLD), Stage Stores Inc. (SSI), Safeway Inc. (SWY), Walgreen Co. (WAG), and Zale Corp. (ZLC).
Competitors for JCP include: Target Corp. (TGT), Wal-Mart Stores Inc. (WMT), Sears, Roebuck and Co. (private), and DSW Inc. (DSW).
PowerOptions provides a free 14-day trial of its service. So join PowerOptions today, and you too can start reaping the benefits of the retail covered call investment strategy.
PowerOptions provides Internet based tools for analyzing stock options with specific search criteria and for finding potentially lucrative option income. For those seeking to execute a covered call investment strategy for their personal portfolios, PowerOptions provides an Internet based search engine for finding potentially lucrative income producing covered call stock options positions.
PowerOptions‘ sister company PowerOptionsApplied provides expert stock option trading recommendations. PowerOptionsApplied specializes in covered calls, iron condor and selling naked puts stock options strategy recommendations. PowerOptionsApplied provides a 30-day risk free trial of its service.
[tags] S&P500, J.C. Penney Corporation, Inc., Kmart Corporation, Carrefour SA, Sears, Roebuck and Co., AZO, Autozone Inc., BBBY, Bed Bath & Beyond Inc., BBY, Best Buy Co. Inc., BIG, Big Lots Inc., BWS, Brown Shoe Co. Inc., CAO, CSK Auto Corp., CC, Circuit City Stores Inc., CHRS, Charming Shoppes Inc., CMRG, Casual Male Retail Group Inc., CONN, Conns Inc., COST, Costco Companies Inc., CVS, CVS Corp., DKS, Dicks Sporting Goods Inc., DSCM, drugstore.com Inc., DSW, DSW Inc., FDO, Family Dollar Stores Inc., FL, Foot Locker Inc., FRED, Freds Inc., GYMB, Gymboree Corp., HIBB, Hibbett Sporting Goods Inc., JCP, Penney (J.C.) Co. Inc., KR, Kroger Co., KSS, Kohls Corp., LDG, Longs Drug Stores Corp., NAFC, Nash Finch Co., NDN, 99 Cents Only Stores, PETM, PetsMart Inc., PSS, Payless ShoeSource Inc., RAD, Rite Aid Corp., RCII, Renters Choice Inc., SBH, Sally Beauty Holdings Inc., SHLD, Sears Holdings Corp., SSI, Stage Stores Inc., SWY, Safeway Inc., TGT, Target Corp., TUES, Tuesday Morning Corp., WAG, Walgreen Co., WMT, Wal-Mart Stores Inc., ZLC, Zale Corp., covered call investment strategy, investment strategy, iron condor, option income, poweroptions, selling naked puts, stock option trading, stock options [/tags]