Add KSS Puts

Shorting the Gap

By Bryan Bottarelli
Monday, August 11, 2008 2:34 PM EDT
Mon, 11 Aug 2008 18:34:00 GMT

PLAY: Buy the KSS September 50 Puts (KSS UJ) at or under $2.70, good for the day. Place a protective stop limit at $1.40 and a pre-determined sniper sell at $3.60.

Dear Bottarelli Research Member,

One look at today’s chart of Kohl’s (KSS – NYSE) and you’ll understand today’s put play opportunity.

KSS

The mid-level retailer is scheduled to report earnings on Thursday, August 14th, but today the stock is blasting higher on speculation that Q2 profits will not be as bad as expected. To me, it looks like nothing more than a one-day short-covering rally. After all, we all know that top retailers (like KSS) are expected to report a fifth consecutive drop in quarterly earnings. We also know that the benefits of the federal stimulus checks has now dried up. Combine these two items with weak “back to school” sales forecasts, and today’s upside pop looks like a prime shorting opportunity. Therefore, let’s add KSS puts now!

PLAY: Buy the KSS September 50 Puts (KSS UJ) at or under $2.70, good for the day. Place a protective stop limit at $1.40 and a pre-determined sniper sell at $3.60.

And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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