Buy KSS Puts

Playing Near-Term Retail Weakness

By Bryan Bottarelli
Tuesday, August 14, 2007 2:12 PM EDT
Tue, 14 Aug 2007 18:12:00 GMT

Dear Bottarelli Research Member,

Today’s disappointing news from Wal-Mart (WMT – NYSE) is putting a black cloud over the entire retail sector — and this sets the table for a new downside position in Kohl’s (KSS – NYSE).

KSS

As you can see from the chart above, the mid-level operator of 824 stores in 45 states is firmly below its 200-day moving average and setting new 52-week lows along the way. This should lead to more selling pressure leading into their August 16th earnings announcement, so let’s use these bearish overtones to add KSS puts to our ledger now.

PLAY: Buy the KSS September 60 Puts (KSS UL) at or under $5.10, good for the day. Current bid/ask spread is $4.80 to $5.00. Place a protective stop limit at $3.00.

Lock and load

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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